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Credit Constraint Indicator - From the Ifo Business Survey for June 2014

Financing Conditions in Germany Remain Very Good

German companies continue to enjoy very easy access to bank loans. After falling to a historical low in May, credit constraints for German industry rose slightly to 18.3 percent in June from 17.4 percent last month. Financing conditions for German business were already excellent prior to the base rate drop by the ECB and remain so.

Credit constraints for manufacturing increased by 0.9 percentage points to 16.7 percent. Large companies continued to report very good access to bank loans. Only 13.3 percent of firms reported restrictive access to bank credit. By contrast, almost a fifth of small firms cited problems obtaining bank loans.

Credit constraints also increased in construction and distribution in June. However, at 18.6 percent and 22.6 percent respectively, they remain very low by historical comparison.

Hans-Werner Sinn
President of the Ifo Institute

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Share of firms that indicated that credit access is restricted
  06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14 03/14 04/14 05/14 06/14
Industry and Trade 19.4 19.8 19.7 19.7 19.8 19.7 19.2 19.5 18.6 18.5 18.2 17.4 18.3
Manufacturing Firms: 17.9 18.8 18.2 18.8 18.4 18.5 17.7 18.5 17.7 17.0 16.1 15.8 16.7
large
15.7 16.0 15.6 15.3 15.4 15.4 14.9 14.2 13.8 13.3 13.0 13.7 13.3
medium-sized
17.0 18.2 16.9 18.4 18.2 17.2 16.7 18.6 17.3 16.6 15.4 15.3 16.1
small
21.5 22.6 23.0 23.3 21.6 23.4 22.0 22.7 22.7 21.6 20.6 18.6 21.2
Construction 23.2 23.8 23.9 23.5 24.7 25.4 24.5 23.8 24.6 23.3 23.8 22.0 22.6
Trade 19.5 19.3 19.5 19.2 19.4 18.8 18.6 18.9 17.2 18.1 18.2 17.3 18.2
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


Short URL: www.ifo.de/w/4DavDcdgt