Press Release from 2022-10-13 / Group, Group, KfW Research

KfW ifo Credit Constraint Indicator: Credit access became significantly more difficult for SMEs in the third quarter

  • 27.9% of small and medium-sized enterprises are facing more restrictive lending policies from banks
  • Credit becoming more accessible for large enterprises
  • Overall credit demand has hardly changed

The KfW ifo Credit Constraint Indicator for small and medium-sized enterprises rose steeply in the third quarter. Of the surveyed SMEs who were negotiating loans, 27.9% regard the policies of banks as restrictive. That was 7.1 percentage points more than in the previous quarter. That means the Credit Constraint Indicator for small and medium-sized enterprises has reached a new record high since the current survey methodology was introduced in 2017.

Service providers were most likely to complain about difficulties accessing credit (33.2%), followed by manufacturers (27.7%). At some distance, they were followed by construction and civil engineering (18.3%), wholesalers (17.3%) and retailers (17.2%).

“Given the looming recession, the huge spikes in energy prices and rising interest rates, more cautious bank policies and worsening financing terms were to be expected”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “It is therefore surprising that the situation for large enterprises has eased for the second consecutive quarter, unlike in the SME sector. The advantage which large enterprises traditionally have in accessing credit is therefore widening significantly.” Credit constraint for large enterprises fell by 2.3 percentage points to 11.2% in the third quarter.

The share of enterprises conducting any loan negotiations with banks is still below the long-term average in both size categories, with 20.3% of SMEs and 29.9% of large enterprises requesting finance. This must be seen in the context of the exceptionally strong lending growth in German banks so far this year. The volume of loans outstanding to domestic non-financial corporations grew by around 13% in August on the previous year. Köhler-Geib added: “A possible explanation for this discrepancy is that high financing requirements for working capital and storage are emerging as a consequence of the massive increase in energy prices and persistent supply bottlenecks, and that businesses are reluctant to invest at the same time because of the high uncertainty. In order to close such liquidity gaps, businesses could start by mainly drawing on existing lines of credit that do not require any new negotiation.” In addition, high-volume loans to a small number of businesses can have a noticeable influence on the market result in the current exceptional situation. One example is the loans extended by KfW in support of energy utilities on behalf of the Federal Government.

The KfW ifo Credit Constraint Indicator is available for download at
KfW ifo Credit Constraint Indicator


Portrait Christine Volk