Since spring 2003, in its regular surveys of German businesses in industry and trade, the Ifo Institute has queried companies’ assessments of bank lending policies. The special question on access to credit was added to the Ifo Business Survey because of the acute difficulties of the German banking system at that time and after a comprehensive analysis of the Japanese banking crisis. The monthly Ifo Business Survey, from which the Ifo Business Climate is calculated, is based on ca. 7,000 responses from firms in Germany. The special question on bank lending policies had been asked twice a year up to the August survey but will now be polled monthly. The results will be released monthly at a previously announced date under the name “Credit Constraint Indicator”.
To calculate the intensity of credit constraints 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 the percentage of firms choosing the last category, i.e. the share of firms that feel that credit access is restrictive.
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