Non-Bank Lending Conditions Dangerously Easy: UBS

Greater regulation of banks coupled with excessive liquidity supplied from monetary policy has triggered an unsustainable surge in non-bank lending as lenders ease underwriting standards to enhance market share, believe UBS analysts. Matthew Mish and Stephen Caprio argue in their March 10 research note titled “Non-bank lending: the tip of the iceberg?” that non-bank lending presents growing downside risks to growth when the non-bank credit cycle turns from boom to bust.

Surge in U.S. non-financial corporate bonds post-crisis

Mish and Caprio point out that U.S. non-financial corporate bonds surged by over $2 trillion to $5.5 trillion post-crisis, though the euphoria has faded with the popping of the commodity bubble. They note that despite the recent retracement in credit spreads, there has been...