This calls for a reflection on the role played by public debt in economic development. It is broadly accepted that governments resort to borrowing because taxation alone cannot provide sufficient funds for economic development. The challenge is to ensure that debt financing is done in a sustainable way.
Smaller banks may also be finding opportunities to reclaim consumer and business customers from nonbank competitors who have pulled back as the securitization markets have dried up. A decomposition of changes in loans held on bank balance sheets across banking organizations in the three size groups provides a glimpse into how diverse the portfolio changes were across banks in the fourth quarter of 2008.