Banks choosing safe investments over risky loans, hindering economic growth.
Banks are lending less to businesses because they are worried about bad loans and prefer investing in safe options like government securities. This is partly due to regulations and low interest rates. To increase lending to businesses, regulators should be more flexible, prepayment penalties should be eliminated, and interest payments on reserves should be reduced. This will encourage banks to make more loans to small and medium-sized businesses, which can help create jobs and boost the economy.