Large Chinese banks are pouring on more funds on the US this year in order to aide in the latter’s economic recovery. Increased lending activities are China’s response to US businesses seeking to widen their sources of additional funding. But it is not only Chinese banks that are pouring more dollars into the American economy, US-based third party lending services also are.
In a report published by the Options Clearing Corporation, securities lending has increased by up to 50% in terms of loans for the last year. There have been approximately 663,934 new loan transactions this year alone.
According to economists, the increase in loans is actually regarded as good news for the economy. There are two reasons for this: first, it indicates a livelier economic activity and a reduction in savings rate. This means that people are actually going out to pay bills and spend the money that they have instead of just saving them in banks. Also, there are many reasons for the bad credit loans and these might include the establishment of new businesses or the consolidation of debts.
The other reason why an increase in loans is good is because it signifies an increase in the number of people who are employed. Even bad credit loans require you to submit a proof of employment before your loan application can be approved. So if more people this year are getting their loan applications approved then that means the number of employment has risen.
Although the increase may be higher in some places and lower in some, the entire economic activity is seen as one.
However, there is a slight detractor to the increase of bad credit loans and that is the issue with the salary. Apparently, if there are more people getting loans, then it could mean that they are having issues with their income. It’s either their pay is not enough or they are unable to balance their sheets right.
But private individuals are not the only ones taking advantage of the new additional funding; American companies are also enjoying the recent addition. Reports show that these companies are happy to tighten their bonds with Chinese banks. With that, as well as some other factors, banks have strengthened their syndicated lending systems to aid in the 6.1% of the total increase in market value for this year alone.
This increase reflects the fact that Chinese financiers have better balance sheets compared to their American counterparts. This means that “outside” banks continue to increase their international presence while other banks are busy trying to keep up in the wake of the economic crisis.