And that means banks can earn much higher risk-adjusted returns on equity when lending to sovereigns, the AAArisktocracy and the housing sector, than when lending to small businesses and entrepreneurs.
And that of course means that banks will lend too little and in relative terms too expensive to small businesses and entrepreneurs.
That must obviously be because regulators sincerely believe that when banks lend, for instance to the government, that is something much less risky for the citizens-society-tax-payers, than when banks lend to small businesses and entrepreneurs.
All this is the result of a horrendous regulatory mistake committed by the Basel Committee for Banking Supervision and the Financial Stability Board. Those regulators concerned themselves with the risk of the assets of banks, instead of with the risks of how banks would manage the risk of those assets.
PS. How come they all can so blithely ignore the Equal Credit Opportunity Act (RegulationB)?