From the Ifo Business Survey for March 2013
Credit Constraints Fall
Credit constraints for German trade and industry continued to fall by 0.8 percentage points to 20.2% in March, marking their lowest value since June 2012. Around a fifth of survey participants reported a restrictive credit policy on the part of banks. The financing conditions for German companies remain very good.
In manufacturing credit constraints dropped to January’s level and are now at 18.7%. Credit constraints were lower for firms in all three size categories. Constraints were lowest for large companies at 17.6%, while small firms experienced the highest level of credit constraints at 21.1%.
In construction credit constraints dropped again slightly and are now at 26.3%. A decline was also seen in distribution. Only 19.4% of distributors reported restrictive access to bank credit.
President of the Ifo Institute
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.