1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/13597/sound-banking-in-lebanon/

Sound Banking in Lebanon

August 17, 2010 by

Lebanon’s financial regulations do not actually regulate the market itself but only the behaviors that the central banks have enabled. It’s like feeding a lion with one hand while fighting it with the other. FULL ARTICLE by Markus Bergstrom

{ 11 comments }

J. Murray August 17, 2010 at 9:00 am

Hmm, one of the quotes wasn’t closed properly.

editor guy August 17, 2010 at 10:04 am

Get a life.

J. Murray August 17, 2010 at 10:33 am

Might want to pull your blog link out of the name next time you try to hide to insult someone else, Tim.

Tim Kern August 17, 2010 at 10:02 am

“While this is a far cry from the full reserves advocated by the Austrian School, they nevertheless constitute the highest in the world…”

As my old race car driving instructor told me, “You don’t need to set a lap record on every lap. You just have to finish ahead of second place.” There are many degrees of “imperfect.” Strive to have the smallest.

Dave Albin August 17, 2010 at 10:30 am

You are probably right. Also, you had a race car instructor?

greg August 17, 2010 at 10:03 am

The Lebanon economy and banks took a big hit after the assination of their PM and the conflict with Isreal. Because they were starting off on such a low point, their percentage gains look great over the last few years. Also, their deposits have grown as the price of oil has been going up from a low of $40 to its current $80 range.

After reading this article, would I invest in Lebanon banks? No! These people are nuts and cannot stop factions from attacking Isreal again which will result in their economy taking another big hit. Then I might take a look at them.

While money supply and loans are an important factor in detirmining the direction of the economy, it is a small factor in comparrison to the actions of individuals.

ABR August 17, 2010 at 12:58 pm

Did the Bank of Amsterdam lend money? That is, did it lend the earnings of its shareholders rather than its depositors?

David Hillary August 17, 2010 at 2:41 pm

Lebanon isn’t the only country without banking problems. Here in New Zealand, (and in Australia where our banks parents banks are) we have not had any problems with the solvency or liquidity of our major banks. Our banks have moderate levels of capital, high asset quality, and low levels of liquid assets: their business model is to borrow short, gear up and lend long but in well secured loans to borrowers with comfortable capacity to repay. We don’t have deposit insurance here either (the deposit guarantee schemes introduced were unnecessary for the major banks, are temporary, and have only had the effect of distorting the small and higher risk financial institutions that exist in the second and third tiers of the financial system), and deposit guarantee scheme extension has not been taken up by a single registered bank in New Zealand (only a handful of non-bank deposit takers, none of whom have any significant part of the financial system have signed up for it).Basically, if the banks are large, have good asset quality, and adequate capital levels, they can borrow short, lend long, and hold bugger all liquid assets, and still get through financial crises and property market crashes without getting into trouble. In fact the banks here have been making record profits (not counting the unusual tax expenses on the settlement of some tax avoidance arrangements). Our banks are rated AA, and are among the safest banks in the world.See: http://www.lostsoulblog.com/2010/01/even-more-evidence-nz-big-banks-had.html http://www.lostsoulblog.com/2009/11/more-evidence-nz-big-banks-had-ample.html http://www.lostsoulblog.com/2009/09/nz-banks-among-worlds-safest.htmlIn fact, during the financial crisis, the banks levels of liquid assets and capital have gone up!Partly this is a result of minimum liquidity ratios being imposed (previously none existed in Australia or New Zealand), and partly in response to the desire of the banks to show their strength and improve their strength by increasing capital levels.

As for Lebanese banks, I’d much rather leave my money with Westpac
Rating Agency Current Credit Rating Outlook
Fitch Ratings AA Stable
Moody’s Investors Service Aa2 Stable
Standard & Poor’s AA Stable

On 31 March 2010, the Bank’s credit rating issued by Fitch Ratings changed from AA- to AA with a ‘stable’ outlook. In the two years prior to 31 March 2010, the rating issued by Fitch Ratings was AA-. The rating outlook at 31 March 2008 was ‘stable’ but was moved to ‘positive’ on 6 June 2008. The rating was changed to ‘stable’ from positive on 3 December 2008 and that position was unchanged until 31 March 2010 when the rating was upgraded with a ‘stable’ outlook. In the two years prior to 31 March 2010, the Bank’s credit rating issued by Moody’s Investors Service has not changed at Aa2 with a ‘stable’ outlook. In the two years prior to 31 March 2010, the Bank’s credit rating issued by Standard & Poor’s has not changed at AA with a ‘stable’ outlook.

David Hillary August 17, 2010 at 2:49 pm

Readers may also be interested in these posts tagged ‘fractional reserve banking’ dealing with the broader topic:
http://www.lostsoulblog.com/search/label/fractional%20reserve%20banking

Incredible! August 17, 2010 at 8:30 pm

And I believed that the most liberal country in the Middle East is Israel or Bahrain.
Wait Lebanon Bust. These same peoples that it inspire in Lebanon, blame the pig Napoleon ever (if read “Animal Farm” by George Orwell know I’m saying): state interventionism. It was so with respect to United States before crisis.

Incredible! August 17, 2010 at 8:35 pm

And I believed that the most liberal country in the Middle East is Israel or Bahrain.
Wait Lebanon Bust. These same persons that it inspire in Lebanon, blame the pig Napoleon ever (if read “Animal Farm” by George Orwell know I’m saying): state interventionism. It was so with respect to United States before crisis.

Comments on this entry are closed.

Previous post:

Next post: