Banks in the eurozone have significantly tightened their lending conditions. As the European Central Bank announced on Tuesday, with reference to its own survey, the tightening of corporate loans was the sharpest since the euro debt crisis of 2011. Conditions for consumer and construction loans have also become significantly tighter.
The banks cited a greater perception of risk in view of the gloomier economic development as the reason. In addition, specific risks in individual sectors or companies were indicated. The institutes are also less willing to take risks in lending. From the point of view of the financial institutions, the credit conditions are likely to be tightened further this year.
Credit demand, meanwhile, has declined, mainly due to rising interest rates. Demand for home loans even fell at record speed. But interest in consumer and other loans also fell sharply. A further decline in demand is expected for the first quarter of 2023.
The results are based on the “Bank Lending Survey” that the ECB conducts among banks four times a year. This is intended to provide insights into lending.
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