Why Banks in the US and Japan Have No Choice but to Lend.
Have you ever wondered why a young entrepreneur in the United States or Japan can get a business loan, a car loan or a mortgage with relative ease? Culture and credit scores play a role, but there is a deeper reason. For years, the United States has operated with policy rates in the low single digits, while Japan has hovered near zero. In both places, government paper simply does not pay enough to carry a bank on its own.
Because of this, banks in those economies cannot sit back and collect risk-free income. If they want to earn a healthy margin, they must go out and lend to households and businesses. They build credit bureaus, price risk carefully, and compete for good borrowers. In other words, low government rates force banks to do the job they were created to do.
On the other hand, in economies where the government pays double-digit yields, the incentive is reversed. Banks earn a comfortable profit by doing very little, and the real economy waits at the door. Same banking license, completely different behaviour, and the difference is the price of government money.
The takeaway is that incentives shape behaviour far more than lectures about culture ever will. Study the incentives and you will see where capital is heading next. To grow your capital alongside an experienced master trader, copy my trades here: https://www.binance.com/en/copy-trading/lead-details/5293024773212277505?timeRange=365D
Disclaimer: This post is for educational purposes only and is not financial advice. Crypto trading involves risk, including the loss of capital. Always do your own research.
#interestrates #Banking #Macro #Finance #Copytrading
$BTC $BNB
Have you ever wondered why a young entrepreneur in the United States or Japan can get a business loan, a car loan or a mortgage with relative ease? Culture and credit scores play a role, but there is a deeper reason. For years, the United States has operated with policy rates in the low single digits, while Japan has hovered near zero. In both places, government paper simply does not pay enough to carry a bank on its own.
Because of this, banks in those economies cannot sit back and collect risk-free income. If they want to earn a healthy margin, they must go out and lend to households and businesses. They build credit bureaus, price risk carefully, and compete for good borrowers. In other words, low government rates force banks to do the job they were created to do.
On the other hand, in economies where the government pays double-digit yields, the incentive is reversed. Banks earn a comfortable profit by doing very little, and the real economy waits at the door. Same banking license, completely different behaviour, and the difference is the price of government money.
The takeaway is that incentives shape behaviour far more than lectures about culture ever will. Study the incentives and you will see where capital is heading next. To grow your capital alongside an experienced master trader, copy my trades here: https://www.binance.com/en/copy-trading/lead-details/5293024773212277505?timeRange=365D
Disclaimer: This post is for educational purposes only and is not financial advice. Crypto trading involves risk, including the loss of capital. Always do your own research.
#interestrates #Banking #Macro #Finance #Copytrading
$BTC $BNB