SME Lending Backfire: Big Banks Poach Small Bank Clients

Central planning fails again.

Caixin: Policy Steering Credit to Small Businesses Is Costing Small Banks Their Clients

In an attempt to meet government targets for lending to small enterprises, some big banks in some regions have poached high-quality clients from small and midsize local lenders by offering them lower interest rates, the law-enforcement inspection team of the Standing Committee of the National People’s Congress (NPC), China’s top legislature, said Wednesday in a report (link in Chinese). Such clients typically have a low risk of default.