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From the Ifo Business Survey for November 2012

Credit Constraints Increase Minimally

Credit constraints for German trade and industry increased minimally by 0.3 percent in November. Only 21.6% of the companies surveyed reported a restrictive credit policy on the part of banks. The financing environment for firms in Germany remains favourable.

In manufacturing credit constraints increased for companies of all sizes, with the sharpest increase for large firms. 18.5% of the large manufacturers surveyed reported restrictive access to bank credit, which corresponds to a 1.4 percent increase. For small and medium-sized companies credit constraints increased by 0.6 percentage points to 20.1% and by 0.7 percent points to 22.5% respectively.

After last month’s sharp increase, credit constraints in the construction sector fell slightly to 28.6%. Credit constraints in the distributive sector remained unchanged. Around one fifth of distribution firms reported problems accessing credit.

Hans-Werner Sinn
President of the Ifo Institute  

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Share of firms that indicated that credit access is restricted
  11/11 12/11 01/12 02/12 03/12 04/12 05/12 06/12 07/12 08/12 09/12 10/12 11/12
Industry and Trade 22.4 23.1 22.8 21.1 20.3 19.5 19.6 19.9 21.2 21.2 20.7 21.3 21.6
Manufacturing Firms:
large
21.0 23.3 21.1 19.7 18.9 17.2 16.7 18.0 19.1 19.7 17.9 17.1 18.5
medium-sized
19.4 20.2 18.1 18.1 17.1 16.5 15.6 17.1 18.9 17.9 18.2 19.5 20.1
small
22.6 24.3 24.6 22.5 21.5 20.8 23.1 22.3 21.8 21.1 22.3 21.8 22.5
Construction 33.0 32.3 32.1 29.0 27.6 26.0 28.0 27.5 26.7 27.6 25.5 28.6 28.3
Trade 20.0 20.3 21.3 19.5 18.8 18.6 17.8 18.0 20.5 20.6 20.4 20.2 20.2
Source: Ifo Business Survey

Legend

The credit constraint indicator is based on ca. 4,000 responses of firms in industry and trade from the sectors manufacturing, construction, wholesaling and retailing. The firms are asked to respond to the following question: “How would you assess the current willingness of banks to extend credit to businesses”? The answers to choose from are “accommodating”, “normal” and “restrictive”. The credit constraint is calculated from the percentages of the responses to the last of the three categories. For the compilation of the credit constraint indicator for German industry and trade, the percentage shares from manufacturing, construction and retailing and wholesaling are weighted with the average credit volume of these sectors in 2005.