#economics #money
During the years of the credit bubble, banks were not issuing any new shares - if anything they were buying them back (reducing share capital).
It is only after things went horribly wrong again in 2008 that banks started raising more share capital (or converting bonds to share capital).
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Mark Wadsworth: Banking made easyhare capital and leverages it with deposits.
23 May 2011 at 10:33
Mark Wadsworth
said...
Den, that's exactly not what they do. They first create the deposits by issuing loans (see step 7), which magically turn into deposits. <span>During the years of the credit bubble, banks were not issuing any new shares - if anything they were buying them back (reducing share capital). It is only after things went horribly wrong again in 2008 that banks started raising more share capital (or converting bonds to share capital).
23 May 2011 at 10:37
Deniro
said...
OH I uderstood and agree your point about making loans from deposits and you made is succinctly. I just thought you are in danger of star Summary
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