Spanish credit market activity and structure, 2004-2015

Over the last ten years the Spanish credit market has undergone major changes. Activity in the credit market has been markedly cyclical, with strong momentum in the economic upswing, followed by a sharp decline during the crisis and a resurgence in the present recovery phase. In turn, the structure of the credit market has been shaped by several factors, such as, for instance, the different impact the crisis had on the different intermediaries or the restructuring of the financial system which resulted in a significant reduction in the number of institutions. This article analyses how credit market activity and structure evolved in Spain between 2004 and 2015, based on the figures for the volume of new loans formalised by resident institutions obtained from interest rate statistics.1 This information should better reflect the flow of new lending than outstanding amounts, since it is not affected by repayments of loans granted in the past. Another advantage of using this data source is that, in the case of lending to non-financial corporations, it draws a distinction between loans for more/ less than €1 million, which may be taken as a proxy for different credit market trends according to firm size. The analysis is broken down by institutional sectors – households and non-financial corporations – receiving lending. Additionally, in the first case a breakdown is made by loan purpose (home loans, consumer loans, other) and, in the second case, by loan size (more or less than €1 million). The data are explored at aggregate level, and also to detect possible differences in behaviour for different groups of institutions. The article is split into five sections, including the introduction. The second section describes how aggregate credit market activity evolved in Spain between 2004 and 2015, and the third focuses on the breakdown by category of institutions. The fourth section analyses the progress made in the consolidation and resizing of the sector in that period, and the fifth summarises the main conclusions drawn.