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Assessing bank lending to corporates in the euro area since 2014

Ramón Adalid, Matteo Falagiarda and Alberto Musso

Economic Bulletin Articles, 2020, vol. 1

Abstract: Bank lending to euro area corporates has gradually recovered since 2014, supported by very favourable financing conditions. An assessment of this recovery indicates that it has been broadly in line with economic activity, although loan growth has remained below pre-crisis levels. The moderate pace of the recovery in loan growth mainly reflects the post-crisis deleveraging process and the growing relevance of alternative sources of financing, as well as somewhat weaker economic activity compared with the pre-crisis period. Nevertheless, evidence suggests that bank lending to non-financial corporations has supported firms’ business investment. The strength of the relationship between business investment and bank lending to corporates has, however, differed across euro area countries. Qualitative and quantitative evidence shows that the recovery in bank lending to corporates has received strong support from the ECB’s non-standard monetary policy measures. JEL Classification: E4, E44, E5, E52

Keywords: Bank lending; monetary policy (search for similar items in EconPapers)
Date: 2020-02
Note: 483719
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