Reluctance by banks to lend to households and businesses could dampen the recovery, according to a new report by the Bank of England

ShareCast - News you can use: "Reluctance by banks to lend to households and businesses could dampen the recovery, according to a new report by the Bank of England (BoE).

The report found that banks have cut their lending to a level that does not reflect waning demand for loans in the wake of the economic crisis.

Banks have also been able to increase the profits they make by raising the ‘mark-up’ that they charge customers, exploiting the credit shortage, the BoE says.

‘Overall, the evidence suggests that the cost of credit rose sharply during the financial crisis, and that there was a reduction in the availability of credit, both for households and companies,’ the bank’s report says.

‘It is likely that tight credit supply played a role in driving up the cost of credit"

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