ifo: Companies Want More Loans during the Coronavirus Crisis, but Banks Are More Cautious

Companies in Germany are requesting more loans during the coronavirus pandemic, but they report greater reluctance on the part of banks. This is the finding of an ifo survey for the second quarter. Of the firms surveyed, 34.4 percent stated that they had held loan negotiations with banks. This is only slightly below the previous record set in the first quarter of 2017. In the first quarter of 2020, this figure was only 29.3 percent. “Of those firms that entered negotiations, 19.4 percent said that the banks were rather guarded. This is the highest figure reported since 2017,” says Klaus Wohlrabe, Head of Surveys at the ifo Institute.

A notable 68.7 percent of food and beverage service companies stated that they had held loan negotiations. The figures for hotels (60.7 percent) and the travel industry (50.7 percent) we also significantly above the average for the entire economy. At 37.6 percent, retail also hit a new record for the sector, as did industry with 34.6 percent and wholesale with 31.1 percent of companies. At the other end of the spectrum, a below-average number of companies in the construction industry reported ongoing loan negotiations (23.8 percent). “This is no surprise, since the coronavirus has impacted construction less severely than other sectors,” Wohlrabe says.

The share of companies that negotiated loans and complained about reluctance on the part of banks was 22.1 percent in industry, which is above the average of 19.4 percent; in the previous quarter it was only 15.1 percent. The Credit Constraint Indicator rose particularly strongly in construction. From a very low level (6.6 percent) in the first quarter, the share of complaints reported in the most recent survey more than doubled and now stands at 17.4 percent. Among service providers, the figure rose from 16.2 percent to 19 percent; in wholesale it actually fell – from 14.6 percent to 13.0 percent.