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Supply and demand in the European credit market during the recent crisis

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  • Giovanni Verga
  • Maria-Gaia Soana

Abstract

The recent financial crisis in Europe has been followed by a significant decrease in credit flows to nonfinancial enterprises. This article investigates demand and supply of loans using data from surveys. Our econometric analysis suggests that recent European Central Bank (ECB) policy has favoured the credit market. Although bank credit standards are tighter than usual, the present low‐credit growth is more the consequence of a weak demand for loans than a reduced supply from the banking system.

Suggested Citation

  • Giovanni Verga & Maria-Gaia Soana, 2012. "Supply and demand in the European credit market during the recent crisis," Applied Financial Economics, Taylor & Francis Journals, vol. 22(16), pages 1355-1366, August.
    • Handle: RePEc:taf:apfiec:v:22:y:2012:i:16:p:1355-1366
    DOI: 10.1080/09603107.2012.654910
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    References listed on IDEAS

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    1. Bijapur, Mohan, 2010. "Does monetary policy lose effectiveness during a credit crunch?," LSE Research Online Documents on Economics 56617, London School of Economics and Political Science, LSE Library.
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    4. Bijapur, Mohan, 2010. "Does monetary policy lose effectiveness during a credit crunch?," Economics Letters, Elsevier, vol. 106(1), pages 42-44, January.
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    6. Rosa, Carlo & Verga, Giovanni, 2007. "On the consistency and effectiveness of central bank communication: Evidence from the ECB," European Journal of Political Economy, Elsevier, vol. 23(1), pages 146-175, March.
    7. de Bondt, Gabe & Maddaloni, Angela & Peydró, José-Luis & Scopel, Silvia, 2010. "The euro area Bank Lending Survey matters: empirical evidence for credit and output growth," Working Paper Series 1160, European Central Bank.
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