China’s banking regulator redefined the loan-to-deposit ratio (LDR) to spur lending

Summary

On June 30th, the China Banking Regulation Committee (CBRC) announced a revision to the calculation method for banks’ regulatory loan-to-deposit ratio (LDR). The new calculation method, effective from July 1st, is expected to stimulate banking lending to the real economy, in particular to small-and-medium-sized-enterprises (SMEs). Moreover, the new calculation method reflects the authorities’ resolution to push forward interest rate liberalization and open the banking sector to foreign capital.

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