Companies Hold Back On Borrowing
The amount of companies borrowing money from banks is decreasing, and this in return slows down the progress of many banks. The amount of loans being taken by companies has decreased since last month, and the increase of loans for the first quarter is relatively low compared to that of the previous years. Companies are not borrowing much because investors are afraid and suspicious of the economy, and are not fully confident that their investment will have a positive return. Many investors are worried about what will happen in the future.
Investors have valid reasons to hold back on investing because the recent reports of the stock market and its highs and lows are not in any way reassuring for investors. The constant drop and rise on the stock market tells investors that the market is not yet stable, thus giving them less of an incentive to invest. Employment rates are also indicating that the economy is not doing so well. But at the same time investors holding back on their investments is also having a negative impact on the economy, so as they hold back because the economy is not doing well, they themselves are hurting the economy at the same time.
Written by: Jessica Ho
Source: The Wall Street Journal