The January 2010 BLS shows a further decline in the net tightening of credit standards, although at a slower pace than in previous quarters. The decline in net tightening was stronger for mortgages than for consumer credit or for loans to non-financial corporations.
Overview of the results:
The results reported in the January 2010 bank lending survey (BLS) relate to changes recorded during the fourth quarter of 2009 and to expectations for the first quarter of 2010. The survey was conducted between 7 December 2009 and 8 January 2010. 118 euro area banks participated, leading to a response rate of 100%.
Overall, the January 2010 BLS points to a further decline in the net tightening of credit standards, although at a slower pace than in previous quarters. The decline in net tightening was stronger for mortgages than for consumer credit or for loans to non-financial corporations (NFCs). All in all, a turning-point in the tightening trend observed since the second half of 2007 is now closer, but has not yet been reached.
The net tightening of credit standards on loans to NFCs declined to 3 per cent in the last quarter of 2009 (compared with 8 per cent in the third quarter and 21 per cent in the second), which was somewhat above expectations, at the time of the previous survey round, that net tightening would reach zero at the end of 2009. Looking forward, euro area banks expect some further tightening of credit standards on loans to NFCs in the first quarter of 2010, with net tightening potentially worsening slightly to 4 per cent.
Banks reported a smaller contribution to the overall net tightening from risks related to expectations about general economic activity, the industry-specific outlook and collateral. Bank-specific factors, however, provided a more ambiguous picture. On the one hand, banks’ access to market financing and liquidity position contributed to an easing of credit standards in the fourth quarter of 2009, albeit slightly less so than in the previous survey round. On the other hand, costs related to banks’ capital position contributed to an increase in the tightening of credit standards.
© ECB - European Central Bank
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