US small- and mid-sized banks are vital to credit formation as they collectively represent 80 percent of commercial real estate lending
With fears of contagion following the failure of Silicon Valley Bank and others in the US and the Credit Suisse saga in Europe have ebbed over the last week, there remains an area of concern in the world’s largest economy that could cause the next banking crisis there.
Depositors are said to be shifting their monies from smaller US lenders to larger ones as well as to money market funds, crimping the capability of such banks to lend more.
US small- and mid-sized banks are vital to credit formation as they collectively represent 80 percent of commercial real estate lending, according to Brett Nelson, head of the tactical asset allocation for the Asset & Wealth Management Investment Strategy Group at Goldman Sachs.
Moreover, as these lenders tighten their lending standards, that could represent something on the order of a half a percentage point drag on gross domestic product growth this year, and the equivalent of about 25 to 50 basis points of Federal Reserve rate hikes, according to Goldman Sachs research.
Source: www.moneycontrol.com
