Raising interest spread could have profound impact on the financial conditions of enterprises and the economy as a whole. At present, the overall earning in the corporate sector is favorable. Given the high financial leverage of enterprises, an increase in interest spread can quickly translate into high financial costs for enterprises and big impact on the economy as well.
Another situation that may arise is that banks may be reluctant to give loans when facing risks and uncertainties in creditor protection. The resulting macroeconomic impact is evidenced by the Japanese experience. Reluctant to lend is a common phenomenon around the world. For instance, last year the loan to deposit ratio in Hong Kong was less than 50 percent.