In the way that bank assets are counted, however, accounting regulations allow for banks to lend four times as much in short term loans to other banks as in long term loans.

The ECB has been offering long term loans to banks at a favorable rate.

So, is there an alternative to the old fashioned monitoring of loans by banks?

First, banks still have few reliable means of checking borrowers creditworthiness, including previous loans from other banks.

Greek banks would need to be recapitalized, but then they could make new loans again.

Collectively, they have extended hundreds of billions of dollars in short term loans to both traditional banks and complex, unregulated investment banks.

Politicians gained influence and popular support by directing state owned banks to make loans to favored constituencies.

Consumer credit began in China only in the late 1990 s, with regulations allowing banks to offer mortgage loans, which now amount to about 10 of total loans.

Between 2008 and 2011, EU taxpayers granted banks 4.5 trillion in loans and guarantees.

As long as zombie banks are weighed down with bad loans, that is unlikely to change much.

When banks make loans, they create deposits for borrowers, who draw on these funds to make purchases.

They chose to ignore any losses that banks will suffer on loans that will mature after 2010.

The bad loans, in turn, have created massive holes in banks balance sheets, which have to be repaired.

In the past, banks kept loans and mortgages on their books, retaining the credit risk.

Banks were too busy collecting fees on new loans, and paying their managers outlandish bonuses.

Were banks that chose to securitize sub prime loans instead of keeping them on their balance sheets behaving irrationally?

Banks and other lenders are extending credit to lower quality borrowers, to borrowers with large quantities of existing debt, and as loans with fewer conditions on borrowers (so called covenant lite loans ).

To be sure, they will help to prevent banks from using instruments resembling collateralized debt obligations (which banks use to repackage individual loans for placement on secondary markets) to reduce their exposure.

With banks reluctant to make new loans, institutions such as pension funds are well placed to meet the desperate demand for capital.

Moreover, securitization contributed to bad lending in the old days, banks that originated bad loans bore the consequences in the new world of securitization, the originators could pass the loans onto others.

Most of the world s largest banks are essentially insolvent, and depend on continuing government aid and loans to keep them afloat.

Between November 2008 and June 2009, China s banks issued more than 8.6 trillion ( 1.3 trillion) in new loans.

After all, if they defaulted on their loans, the banks would repossess the house at a higher value.

Educational loans should be booming in urban and rural China, but banks do not know to whom to lend, so they are not.

Educational loans should be booming in urban and rural China, but banks do not know to whom to lend, so they are not.

The tests were supposed to reveal the true conditions of banks saddled with unaudited toxic assets in housing loans and financial derivatives.

In particular, bank assets (mainly the loans by banks) can not be more than 12.5 times the bank capital.

Then there is the exposure of banks and other financial institutions to rising losses on loans that financed reckless leveraged buy outs (LBOs).

We allow non banks to make home loans and let them offer creative, more affordable mortgages to prospective homeowners not well served by conventional lenders.

And there is a large volume of bad loans in some state owned banks and in the shadow banking system.

Encouraging banks to turn loans kept on their books into securities also helped reduce the overall level of caution in the extension of credit.

Money used by commercial banks to satisfy the RRR, which is held in accounts at the PBC, can no longer be extended as loans.

China, in turn, could land hard as its real estate bubble deflates and the country s banks are forced to work off the bad loans.

However, pawnbrokers have the advantage of not requiring credit checks or proof of salary, and can arrange loans faster than banks.

Instead, supervisors estimated only losses that banks can be expected to incur on loans (and other assets) that will come to maturity by the end of 2010.

US banks finance up to 100 of a house s value, sometimes even more, and the sub prime market even includes loans to people without jobs and income.

US banks finance up to 100 of a house s value, sometimes even more, and the sub prime market even includes loans to people without jobs and income.

Instead, supervisors estimated only losses that banks can be expected to incur on loans (and other assets) that will come to maturity by the end of 2010.

Moreover, since farmers who do have access to formal credit will have less incentive to repay their loans, banks will become more reluctant to lend to any farmers at all.

Unable to repay their loans, they kill themselves.

But higher inflation would help to accelerate desperately needed adjustment in Europe s commercial banks, where many loans remain on the books at far above market value.

Developing country governments will be only too pleased to borrow without the pesky conditions that the World Bank and existing regional development banks typically attach to their loans.

Thus, creditors mainly German and French banks are not expected to suffer losses on their existing loans, while borrowers gain more time to put their houses in order.

The Kazakh government, which had been scrambling to support its overextended private banks with capital injections and nationalizations, gave up and decided to pull the plug. The banks defaulted on their loans, and creditors took large haircuts (reductions in principal value).

Others did so because the banks, shocked by the collapse of the securitization business, stopped giving them home equity loans for consumption purposes.