Banks in Germany have tightened their loan criteria for businesses during the third quarter, according to recent findings from the KfW ifo Credit Constraint Indicator. The report highlights that 34.5% of large enterprises experienced difficult negotiations with financial institutions, marking an increase of 8.7 percentage points from the previous quarter and 13.2 percentage points compared to the same period last year.
KfW Research, which analyzes data collected by the Ifo Institute's economic surveys, attributes this trend primarily to a decline in access to finance for large manufacturing enterprises. "The main reason for the high number is the rapid deterioration in access to finance for large enterprises in the manufacturing industry," said Stephanie Schoenwald, a financial market expert at KfW Research. She noted that 40.4% of these enterprises perceived banks' policies as restrictive, showing a significant rise of 19.9 percentage points over the previous quarter.
Schoenwald further explained that "the ongoing industrial recession is likely to prompt banks to subject loan applications from this economic sector to a particularly rigorous appraisal." Small and medium-sized enterprises (SMEs) also faced challenges, with 31.5% reporting barriers to obtaining loans, up by 3.7 percentage points from earlier figures.
The demand for loans has declined after recovering slightly in prior quarters. Large enterprises negotiating loans with banks dropped by 5.2 percentage points to 27.7%, while SMEs saw a smaller decrease of 0.9 percentage points, bringing their share down to 20.3%.
"Credit demand from small and medium-sized enterprises has lacked dynamic already since 2021," Schoenwald stated, noting that since then, around one-fifth of these businesses have sought bank loans consistently each quarter.
The KfW ifo Credit Constraint Indicator's current edition is accessible online, providing further insights into these trends.
KfW offers various promotional programs aimed at supporting SMEs on behalf of the Federal Government.