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Recent developments in lending to non-financial corporations: supply and demand factors

Author

Listed:
  • Roi Barrera
  • Sergio Mayordomo
  • Irene Roibás
  • Manuel Ruiz-García

Abstract

Since summer 2020, resident banks' lending to non-financial corporations has been sluggish. In the wake of the impact of the health crisis, this has been against a backdrop of weak demand, a relatively steady supply of bank lending and an increase in financing obtained through issuance of debt securities. An analysis drawing on the granular information both of firms and banks confirms that this loss of momentum in bank lending is explained essentially by demand factors. In particular, there are signs that some firms have been using part of the liquidity buffers they built up in 2020, and that large corporations have replaced part of their bank lending with issuance of debt securities. The analysis also suggests that supply factors linked to the amount of capital available to banks are not an important factor in explaining the weakness of lending to non-financial corporations during the period considered.

Suggested Citation

  • Roi Barrera & Sergio Mayordomo & Irene Roibás & Manuel Ruiz-García, 2022. "Recent developments in lending to non-financial corporations: supply and demand factors," Economic Bulletin, Banco de España, issue 1/2022.
    • Handle: RePEc:bde:journl:y:2022:i:01:d:aa:n:05
    Note: Analytical Articles
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    References listed on IDEAS

    as
    1. Álvaro Menéndez & Maristela Mulino, 2021. "Economic and financial performance of Spanish firms in 2020 and 2021 according to the Central Balance Sheet Data Office," Economic Bulletin, Banco de España, issue 4/2021.
    2. Asim Ijaz Khwaja & Atif Mian, 2008. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market," American Economic Review, American Economic Association, vol. 98(4), pages 1413-1442, September.
    3. Berg, Gunhild & Schrader, Jan, 2012. "Access to credit, natural disasters, and relationship lending," Journal of Financial Intermediation, Elsevier, vol. 21(4), pages 549-568.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    credit supply; credit demand; debt securities issuance; non-financial corporations.;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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