News from 2023-10-16 / KfW Research
KfW-ifo Credit Constraint Indicator Q3 2023
Challenges are mounting for businesses negotiating loans
Companies seeking loans encountered increasing obstacles in their credit negotiations with banks. In the third quarter, the KfW ifo Credit Constraint Indicator for SMEs rose significantly to 31.7%, reaching a new high since 2017, when the methodology was changed. The share of large enterprises surveyed that described the position of banks as restrictive also grew to reach 21.3%.
There are two main reasons for the growing difficulties businesses are facing in their attempts to obtain credit. For one thing, loan interest rates continued to rise even through summer in the context of the fight against inflation and, for another, it is plausible that credit institutions are taking a closer look at loan applications amid weaker economic sentiment.
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