Lower borrowing needs in Danish corporations compared to European during COVID-19

Analysis - October 2020 - No. 20

Authors Otte, Alexander Meldgaard; Jensen, Carina Moselund; Loncar, Nastasija; Jensen, Rasmus Mose
Subject Banks; Current economic and monetary trends; Danish Economy; Euro area; Other economic analyses
Type Analysis
Year 2020
Published 27 October 2020
Corporate borrowing has been virtually unchanged in Denmark during the first wave of the pandemic, whereas corporations in a number of European countries have increased their borrowing heavily. The national differences especially reflect varying corporate liquidity needs. Corporate borrowing has been higher in countries that have seen a heavy economic downturn. The capital reserves accumulated by corporations prior to the first coronavirus outbreak have also had an impact on their borrowing needs. Another explanation of the varying borrowing needs and loan supply may be the extensive policy measures implemented by several countries to support corporate liquidity.