Latest BIS growth agenda initiative will examine structural and behavioural barriers to raising non-bank finance
UPDATE 16 March 2012: The Taskforce has now published its report, which we discuss in this post.
The Department of Business, Innovation and Skills yesterday announced the formation of an “industry-led Taskforce…that will examine the challenges facing business in diversifying their finance”. The context of this exercise is the difficulties that small and medium-sized businesses report in obtain bank lending, and its implicit aim is to promote different methods of non-bank lending. BIS’s press release states that the Taskforce’s focus will be:
“on debt and credit products, looking at a range of finance choices, old and new, from corporate bonds to ‘crowd-funding’”.
The reference to corporate bonds is to the recent increase in:
- private placements of debt by unlisted companies in the UK, often offered to their own customers (see this recent effort by Caxton FX); and
- the ORB debt market operated by the London Stock Exchange, which we discuss in this post.
“Crowdfunding” is a generic term applied to lending aggregated from a group of individuals or non-bank corporate lenders to private companies (disintermediating the banking sector in the process), of which the leading example in the UK is Funding Circle.
