The business gets into debt

The Federal reserve is not without anxiety noted that only in 2018 the amount of loans granted to companies with a large amount of debt increased by 20% — to $1.1 trillion.

The share of risky loans has already exceeded the level previously recorded in 2007 and 2014. However, as before, very few firms-the debtors are eventually forced to declare themselves bankrupt, but the fed fear that their number will increase if the economic situation will become less favourable, even at the expense of lower activity. The result will be layoffs and the growing instability in the financial sector.

The fed had already drawn attention to possible problems in the field of corporate lending. So, in November of 2018, it was noted that the requirements for borrowers are reduced, and at the beginning of 2019, the President of the Federal Bank of Dallas Robert Kaplan warned that in the event of even a minimal decline in the availability of debt the companies will aggravate its consequences.

However, while the accumulation of debt continues, aided as favorable position in the economy and low interest rates, due to which investors are willing to take risks to earn through lending. Realize it is mainly the mutual funds that receive funds from multiple sources or combining for redemption of obligations of the borrowers with a view to resale banks, insurance companies, hedge funds and other financial institutions,
Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Please disable your ad blocker

We know you are here for the stories. Not the ads. But we need the ads to keep the lights on. So please whitelist