5 Ivashina and Scharfstein (2010) document a sharp contraction in new loans to large borrowers during the peak of the financial crisis with a 47% quarter-on-quarter fall from Q3-Q4 2008. 6 Brooke et al (2015). 7 Haldane (2013) for instance argues that “We need to build defences to protect against the collateral damage from financial flood. We need to be popping, not mopping”. 8 Consistent with that, the FPC is not authorised to take actions that would “have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy in the medium or long term”, Financial Services Act (2012), Section 9C; see http://www.legislation.gov.uk/ukpga/2012/21/pdfs/ukpga_20120021_en.pdf. 9 The Bank of England published a staff paper in 2015 that sets out a framework for measuring the macroeconomic costs and benefits of higher bank capital requirements. See Brooke et al (2015). 10 Brooke et al (2015) estimate that a1percentage point increase in risk-weighted capital ratios will result in a 10 basis point increase in lending rates. This estimate includes a partial offset due to the Modigliani Miller (1958) theorem, under which the capital structure has no impact on funding costs as more equity makes debt safer and equity less volatile, lowering the required rate of return for both. The conditions for the full offset in the theorem are unlikely to hold in practice for banks.
Ladies and Gentlemen, it is also our expectation that the bank will continue to support the SME sector in Zambia, as the SME sector is key to sustainable economic growth and development of the country. You will agree with me that SMEs have the potential to create many productive jobs and contribute significantly to our economy, if well supported. It is our expectation that Absa Group Limited, through Barclays Zambia, will continue with its efforts and strategies that promote financial system stability, support monetary policy, enhance financial inclusion and gender mainstreaming for sustainable development in line with the Bank of Zambia’s strategic objectives. Today, as we commission this site, it is my hope that the facility will be of highest standards and that the new premises will provide an environment for the provision of innovative financial solutions to the public as an endorsement of the Absa Group brand promise “Bringing Possibilities to Life.” Master of Ceremonies, distinguished guests, ladies and gentlemen, with these remarks, please join me in applauding the Board, management, and staff of Barclays Bank Zambia, and Absa Group Limited, for this initiative that will introduce convenience and world class banking services and facilities to its clientele. The timing of this project is also a good indication that the Absa Group is opportunity focused rather than challenges. We hope this will rub on to the other players in our economy as well. Thank you and God bless.