But banks, including politically powerful community lenders, have stoked fears that the new regulator could become an unwieldy monster and that its mandate to make products simpler could constrain credit.
"Until the resolution of the euro zone crisis, a period of continued market instability, constrained credit as well as the resulting near standstill in Western Europe is expected to seriously affect the outlook for the E.B.R.D. region," the bank warned in a report on regional economic prospects, published in October.
On top of that, he adds, the inability to securitize will constrain credit more than if banks alone had cut back on lending.
Table 11 Distribution of credit constrained Credit rationed category Frequency Percentage Cumulative Unconstrained borrowers 56 28.1 28.1 Unconstrained non-borrowers 49 24.6 52.8 Quantity rationing 37 18.6 71.4 Risk rationing 57 28.6 100 Total 199 100 Source: Own Survey, 2014.
Bank lobbyists say a regulator like Ms. Warren would overreact in protecting consumers from abusive loans, constraining needed credit.
That will lead to more foreclosures — declining equity is a risk factor for default — and more defaults and foreclosures will hamper the banks' recovery and further constrain credit.
All these developments may have constrained the credit supply of some institutions.
Another study carried out in Nigeria reports that female entrepreneurs are constrained in credit due to their weak financial position and the lack of collateral.
As a result, the economy lose some of the potential benefits of promising projects and the constraint of credits and credit constrained firms cannot contribute to employment generation and poverty alleviation.
Hershey is also wary of endangering its investment-grade credit rating, constraining the amount of debt and equity it can raise in support of its bid, these people said.
The results indicate that small firms may be less credit constrained than is suggested by a narrow definition of credit.
