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Marked Increase in Credit Constraints

Summary:
Credit Constraint Indicator - From the Ifo Business Survey for March 2016 Mar 29, 2016 The credit constraints for industry and trade rose to 15.2 percent in March from 14.5 percent last month – the largest increase since June 2014. This was a result of responses on the credit climate in trade, whereas manufacturers again reported an easier access to credit. For the German economy, bank financing continues to be not a problem. The recent rate cut by the European Central Bank has had no visible impact on the German market for business loans. After the strong increase in the previous month, the credit constraints in the manufacturing sector fell to 12.7 percent, which was almost back to the January level. In all three company-size categories, conditions improved. The credit constraints weakened most for large companies. In construction, financing conditions remained unchanged. In the trading sector, the credit hurdle rose 2.4 percentage points to 16.8 percent. This was the largest increase since July, 2012.

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Credit Constraint Indicator - From the Ifo Business Survey for March 2016

Mar 29, 2016

The credit constraints for industry and trade rose to 15.2 percent in March from 14.5 percent last month – the largest increase since June 2014. This was a result of responses on the credit climate in trade, whereas manufacturers again reported an easier access to credit. For the German economy, bank financing continues to be not a problem. The recent rate cut by the European Central Bank has had no visible impact on the German market for business loans.

After the strong increase in the previous month, the credit constraints in the manufacturing sector fell to 12.7 percent, which was almost back to the January level. In all three company-size categories, conditions improved. The credit constraints weakened most for large companies.

In construction, financing conditions remained unchanged. In the trading sector, the credit hurdle rose 2.4 percentage points to 16.8 percent. This was the largest increase since July, 2012.

Hans-Werner Sinn
Hans-Werner Sinn is President of the Ifo Institute, Professor for Economics and Public Finance at the Ludwig Maximilian University of Munich, Director of the Center for Economic Studies (CES) and Managing Director of CESifo GmbH. His main research interests are taxation, the environment, growth and exhaustible resources, risk theory, climate and energy, banking, demography and social security, macroeconomics and systemic competition. Sinn gained his doctorate in 1978 at the University of Mannheim and his habitation in 1983 from the same university.

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