They are after all intermediators of risk, looking to lay it off quickly, rather than being a warehouser of risk. 2  BIS central bankers’ speeches  The bond market sell-off in 1994 is a good example. (By the by, I recall ‘94 quite well. At the time, I was the teaching assistant for Stan Fischer in the graduate macro course at MIT.
Although their return may provide one avenue for earnings growth to banks of all sizes, it is important that the competitive drive to win borrowers is not allowed to overcome the discipline of prudent lending practice. Directors and management should be particularly attentive to this possibility given the extended period of weak loan demand that we've recently experienced.