Businesses urge banks to reduce lending rates in line BOJ cuts

 

Business leaders are appealing for commercial banks to reduce their lending rates in line with the central bank's recent reduction in interest rates.

 

This, they say, will drive more investments and faster economic growth.

 

Their responses were captured in the third quarter Business and Consumer Confidence Survey conducted by Market Research Services.

 

Some 125 businesses were interviewed.

 

The assets and liabilities of the country's commercial banks, which were published by the Bank of Jamaica under section 64(F) of the Banking Act, jumped to $2.52 trillion or 77 per cent of nominal GDP as at the end of June this year.

 

Nominal GDP, or GDP before adjustment for consumer and producer price inflation, was projected at $3.3 trillion this fiscal year.

 

 

Meanwhile, 58 per cent of the businesses interviewed say they are in need of more capital but only 4 per cent say they will seek funding from the JSE equities market.

 

Some 49 per cent say they prefer traditional commercial bank financing, but approximately 51 per cent of those interviewed stressed that this kind of financing is too expensive and they prefer to rely on their own cash flows.

 

Don Anderson, head of Market Research Services, said businesses reported no major hurdle in accessing loans from financial institutions. 

 

"Amongst businesses currently without a loan, a quarter have never tried or considered acquiring a loan. So they don't look like they're risk-inclined. So they aren't prepared to go and find money to invest in their businesses. But those that have accessed, feel that it's not really difficult. Fifty-seven per cent say they've been able to access funding without a lot of challenges," Mr. Anderson reported.