A much cited simile coined by Alan Greenspan (2000) is that bond markets can act like a “spare tyre”, substituting for bank lending as a source of corporate funding at times when banks’ balance sheets are weak and banks are rationing credit. This was the case in the early 1990s in the United States, and there were some signs of it in Hong Kong in the late 1990s, when domestic banks adopted a conservative lending stance as property prices Conversely, banks may substitute as a source of funds when bond markets dry up, as occurred following the Russian default in 1998
