Bank lending policies less restrictive

Twice annually, in March and in August, the Ifo Institute asks the participants of the Ifo Business Survey to assess banks' willingness to lend money to their firms. According to the results of the August survey, in manufacturing the lending situation continues to ease. The improvement of the business outlook in manufacturing observed since spring 2003 is now being slowly reflected in largely less restrictive lending policies on the part of the banks. The share of firms that reported a willingness of the banks to lend them money almost doubled in the course of the year from 2.6% to 4.5% while the share of firms that feel restricted in banks' lending policies fell from 56.3% to 47.1%. The improvement was felt particularly by mid-sized and large enterprises, but it is still difficult for small enterprises, particularly if they are located in eastern Germany, to borrow money.