From the Ifo Business Survey for January 2014
Credit Constraints Increase Slightly
After dropping to a historical low last month, credit constraints for German trade and industry rose slightly. 19.5% of the companies surveyed reported restrictive access to bank credit, marking a 0.3 percent increase versus December. There has, however, been no change to the very good financing conditions for German companies.
In manufacturing credit constraints rose to 18.5%. This increase was mainly due to slightly higher credit restrictions on small and medium-sized firms. Credit constraints for large firms fell to 14.2%, their lowest level since 2007.
Credit constraints also continued to weaken in construction. 23.8% of companies reported restrictive access to credit. In distribution credit constraints increased slightly to 18.9%.
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.
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.