Who are UK banks lending to?

One of the big component of the (currently forthcoming) research by Andrew Baker, Gerald Epstein and Juan Montecino is a factor called “misallocation costs” — that is, the costs that the distorted incentives prevalent in the financial sector inflict on the wider British economy.   One of the big factors of misallocation is the distortion of lending. Financial institutions seem to far prefer to lend to whizzy financial schemes than to lend to the rest of the economy.

It’s quite hard on a casual search to find out how much money UK-resident banks lend to the various different sectors of the economy, even though this is one of the most important measures of the usefulness of the City of London to the UK economy.

But it is possible, if you squirrel down into the Bank of England’s data, to construct a picture of what’s going on. The outcome isn’t pretty. Here’s a graph showing what’s going on: I’ve constructed it from a Bank series entitled C1.2, and called “Industrial analysis of monetary financial institutions’ lending to UK residents.”  Here’s the graph.

This kind of speaks for itself. (I used data from December 2017, and I was careful to scroll down to the third row in the data series, “Amounts outstanding of lending in all currencies.”)

One pull-out quote for me here is that manufacturing made up just 3.5 percent of all business lending by UK banks. Meanwhile, lending for financial intermediation plus “financial intermediation auxiliary companies” (such as central clearing) made up over 60 percent of all lending.  This isn’t bombshell new information – the experts know of this, and I discuss it in my forthcoming book – but it’s still useful to have the update and the graph.

Which raises a question I pose early in my book: “What is it all for?”

You might have thought that the Bank of England, if it were truly serving British society, would emblazon this extraordinary state of affairs across press releases, with technicolour graphics. Instead, it’s rather buried away.

If you compress the categories together for clarity, and put it in a pie chart, it looks like this:

For those of you who like raw numbers, here is a picture of the data. Click to enlarge. Note that the percentages in the graph are percentages of business lending, the £1.23 trillion figure, (not of all lending, the £2.56 trillion figure.)

Now here’s a graph of how this has changed over time, since the crisis.

(PADSHER, by the way, stands for Public Administration, Defence, Social, Health, Education and Recreation.)

The trend here is again interesting. A growing gold wedge at the top – lending to ‘auxiliary finance,’ which includes things like central clearing, which is key for financial derivatives. This is squeezing out (slightly) more traditional lending to mainstream finance and insurance. These sectors, combined, have remained as important as they were immediately after the crisis, but (to put it crudely) the more lightly regulated shadow banking sector has been elbowing out traditional banking. On a very simplistic level, this would suggest broadly that regulation after the crisis hasn’t worked: it has shifted activities into unregulated sectors. However, in fact the total amounts of business lending has fallen somewhat, from £1.53 trillion outstanding in 2009, to around 1.27 trillion in July 2018, suggesting that this is a more nuanced picture.  Lending to real estate players has fallen from £309bn in 2009 to £189bn in 2018, a hefty fall.

Still, look at all those other sectors in the ‘real’ economy, squashed down at the bottom. Despite all the pushback against finance after the crisis, they don’t seem to be benefiting very much at all. And that stuff — lending to the real economy — really ought to be what finance is about.

This sector is still broken. Finance-cursed, if you will.

PS here’s what some of the data looks like.

 

 

0 thoughts on “Who are UK banks lending to?

  1. Pingback: cialis soft

  2. Pingback: natural cialis

  3. Pingback: cialis 5mg

  4. Pingback: no prescription cialis

  5. Pingback: cialis 5mg coupon

  6. Pingback: cialis from canada

  7. Pingback: cialis walmart

  8. Pingback: non prescription cialis

  9. Pingback: cialis wikipedia

  10. Pingback: online cialis

  11. Pingback: cialis generic canada

  12. Pingback: otc cialis

  13. Pingback: cialis and alcohol

  14. Pingback: cialis medication

  15. Pingback: cost of cialis

  16. Pingback: tadalista vs cialis

  17. Pingback: cialis black

  18. Pingback: cialis on line

  19. Pingback: discount cialis

  20. 카지노사이트

    Thanks for your post here. One thing I would like to say is the fact that most professional areas consider the Bachelor Degree like thejust like the entry level standard for an online college diploma. Although Associate Degrees are a great way to begin, completing your Bachelors reveals many doors to various jobs, there are numerous on-line Bachelor Diploma Programs available coming from institutions like The University of Phoenix, Intercontinental University Online and Kaplan. Another thing is that many brick and mortar institutions offer Online types of their degree programs but normally for a considerably higher fee than the firms that specialize in online higher education degree plans.

  21. 카지노사이트

    Great ¡V I should definitely pronounce, impressed with your website. I had no trouble navigating through all tabs and related info ended up being truly easy to do to access. I recently found what I hoped for before you know it in the least. Quite unusual. Is likely to appreciate it for those who add forums or anything, website theme . a tones way for your client to communicate. Excellent task..

  22. 한국야동

    You completed some nice points there. I did a search on the topic and found
    the majority of people will have the same opinion with your
    blog.

  23. 바카라카지노CSA78.COM

    https://www.csa78.com/ 카지노사이트
    https://www.csa78.com/blank-2 온라인카지노
    https://www.csa78.com/blank-3 인터넷카지노
    https://www.csa78.com/blank-1 라이브카지노
    https://www.csa78.com/blank-4 바카라사이트
    https://www.csa78.com/ 카지노사이트
    https://www.csa78.com/blank-2 온라인카지노
    https://www.csa78.com/blank-3 인터넷카지노
    https://www.csa78.com/blank-1 라이브카지노
    https://www.csa78.com/blank-4 바카라사이트

  24. 바카라카지노CSA78.COM

    https://www.csa78.com/ 카지노사이트
    https://www.csa78.com/blank-2 온라인카지노
    https://www.csa78.com/blank-3 인터넷카지노
    https://www.csa78.com/blank-1 라이브카지노
    https://www.csa78.com/blank-4 바카라사이트
    https://www.wac3636.com
    https://www.xn--o79ak1s1tdy0owni.kr
    https://www.mccasino777.com/
    https://www.txt7777.com
    https://www.csa78.com
    https://www.nox77.co.kr
    https://www.bts555.com
    https://www.osa800.com
    https://www.dbk222.com

  25. Pingback: cheap viagra

  26. Pingback: dutch women viagra

  27. Pingback: female viagra

  28. Pingback: generic viagra online pharmacy

  29. Pingback: natural viagra

  30. Pingback: cialis over the counter at walmart

  31. Pingback: over the counter viagra

  32. Pingback: pfizer generic viagra

  33. Pingback: sildenafil 20 mg tablet vs viagra

  34. Pingback: sophia viagra

  35. 카지노사이트

    https://www.zzy29.com/ ― 카지노사이트
    https://www.zzy29.com/gatsby ― 더킹카지노
    https://www.zzy29.com/33casino ― 인터넷카지노
    https://www.zzy29.com/super ― 바카라사이트
    https://www.zzy29.com/obama ― 퍼스트카지노
    https://www.zzy29.com/trump ― 인터넷바카라
    https://www.zzy29.com/mcasino ― 예스카지노
    https://www.zzy29.com/avata ― 온라인바카라
    https://www.zzy29.com/mgmcasino ― 카지노추천
    https://www.zzy29.com/blog ― 생중계카지노
    http://www.sscc79.com/ ― 퍼스트카지노
    https://www.ywh27.com/ ― 예스카지노
    https://www.kwh27.com/ ― 더킹카지노

  36. Pingback: viagra dosage recommendations

  37. Pingback: viagra for men

  38. Pingback: viagra for sale

  39. Pingback: viagra for women

  40. Pingback: cialis generic name

  41. Pingback: cialis generic tadalafil

  42. Pingback: viagra online canada pharmacy

  43. Pingback: cialis generic tadalafil 10mg

  44. Pingback: cialis generic tadalafil 60mg

  45. Pingback: cialis generic tadalafil walmart

  46. Pingback: viagra prices

  47. Pingback: cialis generic tadalafil for sale

  48. Pingback: cialis generic tadalafil india

  49. Pingback: viagra sex

  50. Pingback: cialis prices 10mg

  51. Pingback: viagra side effects

  52. Pingback: cialis prices 100mg

  53. Pingback: viagra without a doctor prescription from canada

  54. Pingback: cialis prices 20mg

  55. Pingback: cialis prices 5mg

  56. Pingback: generic cialis tadalafil 20mg

  57. Pingback: cialis prices walmart

  58. Pingback: generic cialis pricing

  59. http://bit.ly/2Yoh712

    Overproduction of cortisol contributes to excess belly fat, making it a lot tougher to drop pounds.
    By transferring around quite a bit and making actual weird
    noises I managed to wake her up in hopes of
    getting again to sleep before she did. Is there back up completely different eartips matched or change?
    There are numerous decisions and we expect that headphones and earbuds can be the most useful.
    And much more price-efficient than noise-cancelling headphones.
    There ear plugs for sleeping, swimming, studying, flying, dentists, capturing, working, musicians, youngsters and more.
    Some are water resistant and used for swimming, others should
    all sound to stop. The Aquablocks are the most
    wanted reusable ear plug for swimming, surfing, boating and any occasion the place
    you require water being blocked out of your ears.
    As Ray talked about, I additionally try to stay awake till about 21:
    00 however generally that is really troublesome to do,
    so on occasion I’ll have a short “power nap” to maintain me going.
    After rolling the foam earplug and inserting it inside the ear canal, use your finger to
    maintain the earplug in place so it expands completely inside of the canal.
    The distinctive triple flange design is assured to fit any ear and keep
    them securely in place for maximum comfort and effectiveness.