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From the Ifo Business Survey for May 2013

Renewed decline in the Credit Constraint Indicator

Credit constraints for German industry and trade weakened for the third consecutive time. At 19.8%, the credit hurdle is below the 20% mark for the first time in nearly half a year. Financing conditions for German companies continue to be very good. The extent to which the interest rate cuts by the European Central Bank on 8 May will lead to further improvement remains to be seen.

In manufacturing, credit constraints increased again slightly, but at 19.1% are still very low. While in the medium and small companies, a slight increase was observed, the credit hurdle fell for the large companies where only 17.1% reported problems in obtaining loans.

In construction, the historic low of the previous month was undercut again. Only 23.4% of the firms perceive a restrictive credit policy of the banks. In retailing as well, credit constraints weakened by 0.4 percentage points to 19.2%.

Hans-Werner Sinn
President of the Ifo Institute  

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Share of firms that indicated that credit access is restricted
  05/12 06/12 07/12 08/12 09/12 10/12 11/12 12/12 01/13 02/13 03/13 04/13 05/13
Industry and Trade 19.6 19.9 21.2 21.2 20.7 21.3 21.6 21.1 20.3 21.0 20.2 20.1 19.8
Manufacturing Firms: 18.1 18.9 19.8 19.3 19.2 19.5 20.4 19.1 18.7 19.7 18.7 18.8 19.1
large
16.7 18.0 19.1 19.7 17.9 17.1 18.5 18.6 17.2 18.0 17.6 18.0 17.1
medium-sized
15.6 17.1 18.9 17.9 18.2 19.5 20.1 18.4 17.9 18.2 17.7 17.0 18.0
small
23.1 22.3 21.8 21.1 22.3 21.8 22.5 20.4 21.3 23.7 21.1 22.4 22.8
Construction 28.0 27.5 26.7 27.6 25.5 28.6 28.3 28.1 26.6 26.7 26.3 24.6 23.4
Trade 17.8 18.0 20.5 20.6 20.4 20.2 20.2 20.5 19.5 20.2 19.4 19.6 19.2
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. 

Large firms are those that have more than 249 employees or a turnover of more than €50 million. Small firms are those that have less than 50 employees or a turnover of less than €10 million.

Contact

Dr. Klaus Wohlrabe

Ifo Institute
Ifo Center for Business Cycle Analysis and Surveys
Phone: +49(0)89/9224-1229
Fax: +49(0)89/9224-1463
Email: wohlrabe @ ifo.de
Website


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