Banks and industry - Lecture by the Deputy Governor to the Institute of Bankers

Quarterly Bulletin 1982 Q4
Published on 01 December 1982

The Deputy Governor notes that-as a result of past inflation and recession and the consequent demise of alternative forms of financing-companies are heavily indebted to the banks, and indeed possibly over borrowed. Yet companies will have to continue to attract outside funds; and as the economy recovers, their financing requirement may be substantial. To resolve this dilemma, the Deputy Governor suggests various ways in which companies may diversify their sources of finance:

  • with inflation down substantially, greater long-term fixed-interest borrowing may be possible;

  • where debt is already high, greater equity funding by rights issues may be more suitable;

  • where development expenditure is significant, new forms of off-balance-sheet financing might be appropriate.

In addition, the beginning of a venture capital industry, in which new technology, entrepreneurial talent, and management resources may be combined to create new businesses, particularly in new 'sunrise' technologies, is a potentially importani development.

Moreover, the establishment of these additional sources offinance would ease the task of monetary policy which the Deputy Governor also discusses.

PDFBanks and industry - Lecture by the Deputy Governor to the Institute of Bankers

Other Quarterly Bulletin 1982 Q4 articles

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