Since the 2008 Global Financial Crisis the policymakers that govern banking regulation have prioritised the stability of the global banking system, as it has been shown that general economic wellbeing and society benefits from strong financial institutions . For business lending, which is more complex, has larger loan values, and is deemed to carry higher risk, by ratcheting up the Risk weighting of all business lending under Basil legislation.

I’m not suggesting this is wrong – we all need a secure banking system – no question. But there have been unintended consequences of the new regulatory direction for banks under Basel. Risk Weighted Assets (RWA) changes for business credit has consequences for the working capital strength of businesses large and small, and by extension for macroeconomic and societal outcomes: consequences that have not been considered in the legislative policy.

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