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SELECTED PRESS RELEASE:
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posted on:
8/21/2011 10:43:40 PM EST
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Plenty of Loans
Banks
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Which big bank gives plenty of loans, and is profitable?
Professor and Chair of the Department of Economics at Long Island University's C.W. Post Campus in New York, Dr. Panos Mourdoukoutas is an active investor and the author of several articles published in professional journals and magazines, including European Management Review, Management International Review, Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, and Edge Singapore. He has also published several books, including The Economic Foundations of Intelligent Investing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business.
The author is a Forbes contributor. The opinions expressed are those of the writer.
Which big bank gives plenty of loans, and is profitable?
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For those concerned about big banks not giving loans and losing money, here is a big bank that gives plenty of loans and makes a good deal of profits, but it isn’t in the US, it isn’t in Europe either. It is in China.
Today, China Construction Bank Corporation reported a 31 percent increase in profits on higher loan demand and higher interest rates. But China Construction Bank isn’t a usual bank. Though its shares are listed in the Hong Kong Exchange, it operates as a government department, within a central planning environment of controlled interest rates and mandates, promoting the welfare of the “people” rather than true banks operating in a market system and promoting the interests of their depositors and stockholders. Appointed by CPC-controlled boards, Chinese bank managers lack the freedom, the expertise, and the incentives to evaluate alternative credit opportunities. They, therefore, confine themselves into routine and predictable business, simply collecting deposits and financing government decided real estate projects and SOEs-providing the fuel for the next bubble, rather than searching for creditworthy clients.
State bank financing could explain why the Chinese bubbles have yet to burst. Banks have the direct backing of taxpayers and depositors (often workers required to deposit a certain percentage of their salary with state banks). This means that non-performing loans to real estate developers and near bankrupt corporations are financed directly by depositors and taxpayers. The Chinese Treasury Secretary doesn’t have to ask for legislative approval to help the banks with these loans, as is the case in the USA!
Sincerly,
Annette Granberry
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