Limits to credit creation by banks

• Market forces – these influence the number of profitable lending opportunities.
• Regulatory policies e.g. higher capital reserve requirements imposed by a central bank might limit lending
• Behaviour of consumers and businesses - e.g. decisions about how much of their debt to repay.
• Monetary policy – the level of monetary policy interest rates influences the demand for loans from households and businesses including demand for business loans and mortgage loans in the housing market.