In particular, banks cannot credit individuals operating in shadow economy whose official performance does not correspond to the real one.
When asked about complaints sometimes heard in the public space that banks are reluctant to lend, Brazovskis said the association continuously reports that banks issue loans and have always done so.
“We will always loan if we have anything to loan to. But in these times of uncertainty, our customers are discouraged and wary of taking on new commitments,” said the association representative.
“In Latvia, a major problem is the high proportion of the gray economy, which makes many entrepreneurs, businesses, and households unbankable,” said Brazovskis.
According to him, if an excess profit tax on banks is introduced in Latvia, it could further hinder banks' involvement in lending. "The other thing, this could also mean some negative consequences for bank funders, investors. Investors might be looking at this region, and at financial institutions too, with even more caution," Brazovskis said.
He added that it could also have an impact on the stability of the financial sector.
