The slowdown in German bank lending - revisited

Thorsten Polleit

No 53, Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management

Abstract: The rate of growth in bank loans to private households and firms in Germany has declined substantially since early 2000 and currently stands at virtually zero. In this article, we analyse whether cyclical factors ('demand-side driven') or banks' unwillingness and/or inability to lend ('supply-side driven') can be held responsible for this trend.Our preliminary results suggest that the slowdown in bank loan expansion is largely driven by a decline in the demand for loans. This result is supported by taking into account the latest tendency of corporates substituting bank loans for the issuance of money and capital market instruments. Although it cannot be ruled out that supply-side restrictions have contributed to the dampening of real bank loan expansion, to date these factors have played only a minor role.

Keywords: German bank lending; Credit rationing (search for similar items in EconPapers)
JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (71)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fsfmwp:53

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