Lending in a low interest rate environment

Authors Andersen, Svend Greniman; Kuchler, Andreas
Subject Danish Economy; Financial markets and financial stability; Financial stability; Business enterprises and households
Type Monetary Review  
Year 2016
Published 17 August 2016
Link to publication Monetary Review 2nd Quarter 2016
Competition among credit institutions for corporate customers has intensified in recent years because interest rates are low and demand for loans is subdued. For the most creditworthy firms, this has led to lower loan costs and a slight easing of the terms and conditions for obtaining a loan from a bank. On the other hand, there are no indications that low interest rates and increased competition have prompted credit institutions to ease credit conditions for less creditworthy corporate customers. The demand for loans from Danish firms is relatively subdued and they have relatively good access to finance, by international comparison. Thus, there are no indications that credit constraints are dampening the current upswing in the Danish economy.