Are Australian banks too risk averse for the new economy?
From startups to sustainable energy plays, the new economy is crying out for capital. Where are the banks?
Access to risk capital is vital for the growth of the new Australian economy, but are Australian banks too timid to provide the funds that are needed?
As global interest rates began to rise two years ago and risk capital became more expensive, the implications were painful — if not unexpected — for sectors like the startup ecosystem and fintechs, as well as smaller companies in general.
Who would fund them? In Australia, it’s not the banks. Indeed, over the last 30 years the assets of the Australian banking system have shifted from nearly two-thirds lending to business to two-thirds lending to housing.
As with all things banking, the reason is simple: "because that’s where the money is" — in this case return on equity for shareholders.
