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Does the euro zone’s weak credit growth result from weak banks or the absence of a borrowing requirement?
The euro zone’s weak credit growth, prior to the coronavirus crisis and despite the highly expansionary monetary policy, may come as a surprise. There can be two explanations for this weak credit growth: Weak banks, whose profitability has been affected by the low level of interest rates, which normally discourages credit supply; The absence of a borrowing requirement on the part of households and companies, if one or the other group self-finances its investment. An observation of the trends and central bank surveys seem to show that the euro zone’s weak credit growth since 2014 results from the absence of a borrowing requirement among households and companies, and not from the situation of banks.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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