[PEN-L:4864] Real world of finance capital

[Paul Bowles <paul@xxxxxxxx>]

An interesting news item caught my eye: Moody's has downgraded the rating
of China's big (state owned) banks. The reason for this, given in the
South China Morning Post, is as follows:

"Moody's said the downgrading result from the Government's plans to
transform state banks from development institutions into commercial banks.
The breaking of the link with the Government creates concerns that it
might not rescue the banks if they hit financial problems."

Come back soft budget constraints all is forgiven!

Does anyone know if it is the general case that state owned banks have
higher credit ratings, and therefore lower borrowing costs, than
privately owned banks? I would not have thought so but you never know.

Paul Bowles