Recent Developments in Financing and Bank Lending to the Non-financial Private Sector

27 Pages Posted: 18 Nov 2020 Last revised: 12 Feb 2021

See all articles by Pana Alves

Pana Alves

Banco de España

Roberto Blanco

Banco de España

Sergio Mayordomo

Banco de España

Fabian Arrizabalaga

Banco de España

Javier Delgado

Banco de España

Gabriel Jiménez

Banco de España

Eduardo Perez Asenjo

Banco de España

Carlos Pérez Montes

Banco de España

Carlos Trucharte

Banco de España

Multiple version iconThere are 3 versions of this paper

Date Written: September 23, 2020

Abstract

The COVID-19 pandemic has significantly altered the financing of the non-financial private sector. Financing of the self-employed and businesses has risen as a consequence of both the increase in demand, stemming from greater liquidity needs and from the perceived increase in refinancing risks, and the expansion of supply, stimulated by the introduction of public guarantee programmes and by the European Central Bank’s policies on the provision of liquidity to credit institutions. In contrast, new lending to individuals has fallen, largely as a consequence of the deterioration in the macroeconomic outlook, which has reduced the supply and demand for credit in this segment. The adverse impact of the COVID-19 crisis on the credit quality of deposit institutions’ portfolios is currently being mitigated by the measures taken by the economic authorities and the institutions themselves (in particular, the public guarantee programme and legislative and banking sector moratoria). However, non-performing loans have increased since the start of the pandemic, both in the case of lending to non-financial corporations and to households. The non-performing loans ratio of deposit institutions has, however, held steady since March, as the expansion in lending (the denominator of the ratio) has offset the increase in the volume of non-performing loans (the numerator).

Keywords: financing, lending, households, non-financial corporations, deposit institutions, non-performing loans ratio, public guarantees, moratoria

JEL Classification: E44, E51, G21, G23, G28

Suggested Citation

Alves, Pana and Blanco, Roberto and Mayordomo, Sergio and Arrizabalaga, Fabian and Delgado, Javier and Jimenez, Gabriel and Pérez, Eduardo and Pérez Montes, Carlos and Trucharte Artigas, Carlos, Recent Developments in Financing and Bank Lending to the Non-financial Private Sector (September 23, 2020). Banco de Espana Article 28/20, Available at SSRN: https://ssrn.com/abstract=3729188

Pana Alves (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Roberto Blanco

Banco de España ( email )

Madrid 28014
Spain

Sergio Mayordomo

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Fabian Arrizabalaga

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Javier Delgado

Banco de España ( email )

Madrid 28014
Spain

Gabriel Jimenez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Eduardo Pérez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Carlos Pérez Montes

Banco de España ( email )

Alcala 48
Madrid 28014
Spain

Carlos Trucharte Artigas

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

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