Serving the financially excluded may also entail higher risks for financial institutions, because the poor have fewer resources to cushion themselves against adverse shocks and fewer assets which can serve as collateral for loans than wealthier customers have.
In the US the price-earnings ratio for financial corporations is historically high. In the corporate bonds market, spreads have declined rapidly in recent months. They are now at levels below those prevailing just before Lehman Brothers’ failure (see chart 2). In the euro area the bond spread for financial corporations with a triple-B rating is currently around 640 basis points.