Regulatory reform has made banks more resilient than they were during the previous crisis. A robust lending capacity is now needed to help Finnish firms through the coronavirus crisis.
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Finnish banks have granted relatively little credit to those industries most vulnerable to bankruptcies. This has helped minimise banks’ corporate credit risks.
A range of instruments could be deployed to restrain dangerous growth in lending for house purchase and household debt.
Neighbouring countries’ loan ceiling regulations are tighter than the loan ceiling that comes into force in Finland in summer 2016.
The consequences of a banking crisis could be severe in the exceptionally concentrated Finnish banking system.
The impact of regulation on growth in loan margins has been exaggerated. The impact is strongest in high-risk loans.