SME Financing Difficulties MLF Will Play A Role?

It is rumored that the central bank has not invested in the joint-stock banks in the traditional sense of SLF (standing credit facility), but MLF (medium term lending facility).

MLF requires banks to issue loans for agriculture, rural areas and farmers.

MLF explicitly stipulates that banks can lower lending rates before renewals.

Although the authenticity of MLF is not known, whether it is SLF or MLF, the central bank's move is aimed at improving the credit supply of the real economy and stimulating the real economy.

After the global financial crisis, the call for monetary policy objectives, including financial stability, is also getting higher and higher.

In addition to the reasons for the difficulty of full employment due to the contraction of labor supply, asset price bubbles and high corporate debt also become an important reason for restricting the overall easing of the central bank.

After several rounds of steady growth, the debt rate of non-financial enterprises has risen to 123%, which is higher than the international warning level of 90%.

The low efficiency of incremental leverage also limits the space for monetary easing.

Taking into account the deleveraging of the private sector, if the two kinds of debt entities of state-owned enterprises and local governments can improve the efficiency of leverage, then it will be entirely feasible to make monetary policy more comprehensive and easy to boost the economy.

Therefore, it is necessary to rely on the reform of state-owned enterprises and the financing behavior of local financing platforms.

When the economic outlook is expected to deteriorate, banks will shrink the size of credit because of risk control. Most of the contraction will be committed to SMEs with no government credit endorsement, because of their

Higher.

Under this assumption, the structure of bank credit delivery has undergone important changes: in the past, banks avoided medium and long term loans in the risk aversion period and increased the allocation of short-term loan assets. Nowadays, when the main body of short-term loans is small and medium enterprises, the main body of medium and long term loans is a public sector with the background of government endorsement.

The decline in preferences is accompanied by short-term credit contraction.

The directional easing of money is logically reasonable.

On the one hand, the total volume of loosely fear makes the public sector with low leverage efficiency too fast and leverage, resulting in the accumulation of potential financial risks.

On the other hand, when the banks shrink the credit of SMEs and the financing cost of enterprises is high, the central bank really needs to guide financial institutions to increase their leverage to SMEs through stable liquidity expectations and incentive mechanisms, so as to reduce the lag time that liquidity stays in the base money so as to achieve steady growth, structural adjustment and prevention of financial risks.

On the one hand, from the perspective of ample interbank liquidity, the banking system is not short of money and can easily borrow funds in the interbank market.

Therefore, a new loan with large probability and no return will lead to the deterioration of asset quality. This is the first consideration for banks. It is not realistic to let banks take the initiative to lower lending rates at this time.

Even if the central bank reduces the interest rate of renewed capital to the interest rate of interbank pactions, we consider this "preferential" to be negligible compared to the potential loan losses.

On the other hand,

Being in a deleveraging, even if banks really distribute credit funds to SMEs in accordance with the instructions of the central bank, they may only generate speculative financing needs, and funds will flow into the traditional sector again through interest spreads or regulatory arbitrage.

The question is, how can we solve the problem of monetary policy pmission mechanism? The traditional way is to activate real estate and stimulate the credit supply intention of banks through the collateral effect of asset price rise.

The way to consolidate the capital is to increase the leverage efficiency of the public sector through fiscal reform and state-owned enterprise reform, and to stimulate the leverage of small and medium enterprises through decentralization, deregulation and tax reduction.