32 The level of bank credit provision is lower in some countries, for example the United States, where companies obtain funding via market borrowing to a larger extent. Furthermore, it is not easy to estimate total lending in the economy. There are a number of issues with definitions, for example, how the funding of different subsidiaries in corporate groups should be considered. Is it lending or just internal transactions? If these internal transactions are excluded from total lending, the banks’ share of total lending in Sweden rises to about 80 per cent.
– 73 –SVERIGES RIKSBANK ECONOMIC REVIEW 2016:1BANK CRISES HAVE HIGH ECONOMIC COSTSFinancial crises have occurred for many hundreds of years.33Modern banks have a slightly shorter history but bank crises have nevertheless been a regular occurrence over the last 200 years. Common to these crises has been that they have also come at a major cost to the real economy.34Figure 4 shows how the global financial crisis 2007-2010 affected the development of GDP in the world. The red line shows actual GDP growth in a large number of countries. The broken blue line shows a trend based on data from 2001 to 2007, which has been extrapolated. Expressed in different terms, it could be said that, if GDP had developed in the same way post-2007 as it did during the period 2001 to 2007, average GDP would have followed the broken blue line. The broken yellow line instead represents the trend after the global financial crisis in 2007-2010. Even though GDP fluctuates somewhat over time, the figure is rather striking. 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 01 03 05 07 09 11 13 15 2001-2007 extrapolated trend 2009-2015 trend ActualFigure 4. GDP growth in the world in USD billionNote. The figure is based on seasonally-adjusted quarterly GDP data in USD billion (where up-to-date currency rates have been used) from the following countries: Argentina, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Korea, Luxemburg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.Source: BIS35The figure indicates three things. Firstly, the global financial crisis led to a heavy fall in GDP. Secondly, the GDP fall has been permanent insofar as the economy has not recovered from this following the crisis. The trend of the GDP level is considerably above the actual outcome after the crisis. Thirdly, average GDP growth is clearly lower in the aftermath of the crisis. Currently, GDP is thirty per cent lower than if growth had continued in 33 See Reinhart and Rogoff (2009). 34 See, for example Basel Committee on Banking Supervision (2010a), Basel Committee on Banking Supervision (2010b) and Haldane (2010). 35 See Basel Committee on Banking Supervision (2015e).
– 74 –SVERIGES RIKSBANK ECONOMIC REVIEW 2016:1accordance with the earlier trend. For the countries included in the figure, the aggregate loss in GDP since the crisis amounts to more than SEK 700,000 billion (or USD 76 trillion).