Euro-zone bank lending growth has jumped in recent months, as firms borrowed to tide themselves over while their revenues collapsed during lockdown. (See Chart 1.) At the same time, banks’ willingness to lend has been boosted by government loan guarantees and cheap funding from the ECB. Corporate bond issuance has also surged, supported by the Bank’s asset purchases. But now that economies are re-opening and revenues are recovering, firms’ demand for credit is likely to fall and lending growth should slow. So we think the immediate risks to inflation and financial stability from faster lending growth are limited.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services