The Banking Crisis: who’s still lending?

Posted on March 5, 2013 by

The global financial crisis which was felt in 2008 began in the financial sector and subsequently moved into the different economies across continents. Several recessions have been experienced by nations and have continually been fought by governments. In the case of the United Kingdom, the government is doing its best to cut back on expenditures in order to arrest the country’s deficit in the effort to sustain its economy through the crisis.

The crisis started when commercial banks dutifully lent huge sums of money to finance commercial and residential property mortgages. The investment banks then secured these loans and repackaged them into investment products (sub prime mortgages and toxic funds) which were sold to others like in the form of pension funds as personal investments. The objective was to lend as many mortgages as possible, notwithstanding the potential risks involved, and swiftly moved them to other investment packages before it matures.


The entire cycle ultimately experienced a crash with the small taxpayers and small businesses feeling the impact and bearing the brunt of the financial crisis. It has proven to be an unwise move for the UK banking system to concentrate too much in financing speculative investments and the top corporations instead of supporting the small and medium enterprises which really push up a lucrative economy. This situation has pushed the government Treasury to encourage banks to finance small businesses although the banking sector, being monopolistic in nature, is experiencing difficulties reconciling their efforts. I also blame the FSA for negligence and slack rules on banking practices.

Compared to neighboring countries, the United Kingdom pales in the ratio of bank branches serving populations in terms of lending money to small businesses, and this basically slows down the financial activities of the said banks.

It is an established fact that all people regularly require loans and there are situations wherein a person encounters the necessity to make payments of obligations despite being short of cash. Finances could really be quite cumbersome to a lot of people. There are certain emergency situations when an established business encounters financial burdens and “creative” solutions are necessary in order to keep the business afloat. 

They say that for every problem there is a solution, and in the case of financial emergencies, these days, people resort to the much easier and convenient facility of instant short term loans or payday loans from organisations like These are loans which are easily approved and may even be availed of on the same day it was applied for. The banks are more inclined to serve these short term loans as they are a lot less risky compared to the bigger loan portfolios, particularly the long-term ones, especially during these times of financial difficulties.