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The Association Between Bank Credit Terms and Conditions and the Business Cycle in the Euro Area

Author

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  • Dimitrios Anastasiou
  • Konstantinos Drakos

Abstract

We explored the trajectory of bank loan terms and conditions over the business cycle, where the latter was decomposed into its long-run (trend) and short-run (cyclical) components. We found that deterioration of each business cycle component leads to a significant tightening of credit terms and conditions. We found mixed results concerning the symmetry of impacts of the short and long run components. Symmetry was found between the terms and conditions on loans for small vs. large enterprises. Our findings provide very useful information to policy makers and should be taken into consideration when monetary policies are designed.

Suggested Citation

  • Dimitrios Anastasiou & Konstantinos Drakos, 2019. "The Association Between Bank Credit Terms and Conditions and the Business Cycle in the Euro Area," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 65(4), pages 247-256.
    • Handle: RePEc:dah:aeqaeq:v65_y2019_i4_q4_p247-256
    DOI: 10.3790/aeq.65.4.247
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    More about this item

    Keywords

    credit terms and conditions; business cycle; bank lending survey;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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