Banks, Credit and Business Cycles - Part 2

Monetary review, 2nd Quarter 2013

Authors Abildgren, Kim; Kuchler, Andreas
Subject Danish Economy
Type Monetary Review  
Year 2013
Published 25 July 2013
During the crisis, it has become more difficult to obtain bank loans since credit standards have been tightened from a lenient pre-crisis level. Firms with sound finances have found it easier to obtain loans than firms with poor economic performance. Only a limited share of firms have stated financial constraints as impediments to production, but the picture varies among industries. Many firms and households have opted for a consolidation path, and corporate confidence in the banking sector's willingness and ability to always meet the demand for credit and liquidity in an economic downturn may have weakened. This has dampened the demand for credit. There are no indications that the banks' lending capacity has generally been an impediment to the development in lending. Total credit remains high in a long-term perspective.