Addressing the challenges of post-pandemic debt management in the consumer and SME sectors: a proposal for the roles of UK financial regulators

Abstract

Regulatory actions for short-term debt-relief during the Covid-19 pandemic are facilitating a significant level of indebtedness. We argue that regulators, in leaving the banking sector to manage small business and consumer debtors in ‘tailored arrangements’, risk allowing financial welfare goals to be unmet. Financial welfare goals are important to the Financial Conduct Authority’s (FCA) consumer protection objective and give substantive meaning to the long-term financial stability objective of the Prudential Regulation Authority (PRA). Although the struggles with debt on the part of small and medium-sized businesses and households are not capable of complete resolution by financial regulators, who are constrained by their statutory mandates, we argue that the PRA and FCA should establish a coordinated supervisory framework of ‘tailored supervision’ for banks’ ‘tailored arrangements’ with their debtors. This proposal allows both regulators to address to an extent the needs of unsophisticated post-pandemic debtors and meet their objectives in a joined-up and holistic manner.

A Framework for Short- vs. Long-Term Risk Indicators for Outsourcing Potential for Enterprises Participating in Global Value Chains: Evidence from Western Balkan Countries

“…Numerous well-above industry benchmark values for this particular financial ratio reflect an upward trend in long-term insolvency in the private sector within the Western Balkan region. This upward trend also determines whether financial institutions will extend additional loans to enterprises in the industry (Chiu et al 2021). Finally, the interest coverage ratio is used to determine how well a company can pay the interest on its outstanding debts and to determine the riskiness of lending capital to the enterprise.…”

Innovative Business Strategies in the Face of COVID-19: An Approach to Open Innovation of SMEs in the Sonora Region of Mexico

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