The banks in China's innovation system were thus conservative in providing loans or credits to SMEs in order to maintain lower loan to deposit ratios (75% loan to deposit ratio limit for all commercial banks according to China's Commercial Bank Law).
The 25percentt decline in the stock's price this year has proved to be devastating for 27 insiders, who had borrowed $24 million from the company to buy shares but were unable to maintain the loans and had the shares repossessed.
"If we cannot maintain [these loans] off balance sheet, at a minimum our clients' costs will go up," says Bradley Schwartz, managing director of asset-backed conduits at J.P. Morgan Chase, which administers some $17 billion in conduits.
The banks cannot lend as long as large amounts of troubled loans remain on their books and are required to maintain significant loan loss reserves to meet regulatory capital requirements.
The Fed will also maintain a loan facility, on more generous terms, of $60 billion.
Representatives for Amherst College, Davidson College and the University of North Carolina said Monday that they would continue to maintain no-loan policies similar to the one being rolled back by Williams.
At the same time, there are concerns banks could come under strain from a rise in bad debts if the housing market slows markedly or unemployment rises, making it difficult for customers to maintain their loan repayments.
The legislation would allow colleges to do away with the 50percentt requirements so long as they maintain a loan-default rate of less than 10percentt for the previous three years.
But with the commercial-paper market tightening and the economy deteriorating, more companies will be asking banks to keep their word.Indeed, companies already seem concerned that banks will be unable to maintain promised loan facilities.
If, say, the revenue earned from the venture is in Swedish krona and the exchange rate collapses because the value of the krona falls, the company still has to maintain its loan repayment in US dollars.
