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Covid-19: Bank credit conditions and monetary policy

Author

Listed:
  • Byrne, David

    (Central Bank of Ireland)

  • Holton, Sarah

    (Central Bank of Ireland)

  • Parle, Conor

    (Central Bank of Ireland)

Abstract

The Bank Lending Survey indicates that credit conditions remained relatively stable in the first quarter of 2020, but changes are coming. On the supply side, banks expect to tighten lending criteria in the second quarter of the year. Credit demand from households is expected to weaken substantially. Banks expect increased demand for short-term loans from firms, but less demand for long-term loans, reflecting liquidity needs of businesses and the downturn in investment prospects. Banks expect that monetary policy measures, that provide liquidity support and ease financing conditions, will support their balance sheets, which can help stabilise credit supply to the real economy.

Suggested Citation

  • Byrne, David & Holton, Sarah & Parle, Conor, 2020. "Covid-19: Bank credit conditions and monetary policy," Economic Letters 05/EL/20, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:05/el/20
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol-2020-no-5-covid-19-bank-credit-conditions-and-monetary-policy-(byrne-holton-and-parle).pdf?sfvrsn=4
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