Crisis causes banks to be cautious in granting loans

Crisis causes banks to be cautious in granting loans. What this means, however, for companies that need credit to continue to exist? Some politicians launch the idea of coercive measures, Deutsche Welle said.

Statistics of the ECB in Frankfurt has shown that over the past six months appropriations in the euro area fell slightly, while in Germany they showed growth of 2.5 percent. Therefore the Union of financiers was Fau-AIR no danger of being dry lending. In the Union of German bankers, however, there is some cause for concern because the trend is downward.
Most experts believe that weaken the dynamics of lending was due to reduced demand. But it is true that banks are more cautious. It is compulsory for any worsening of the situation, especially in the current crisis, explains Hans-Joachim Masenberg, deputy executive director of the Union.
Vicious circle
In practice, this is because banks have to provide any credit granted with available capital. And as a higher risk of credit granted may not be returned, the greater must be the provision of employment and amount. As more money goes to ensure the less money remains for the credit.
What banks do is to examine the solvency of customers. This is consequential process, which is situation-cyclical nature, indicating Hans-Joachim Masenberg.
For companies with lower margin is more difficult to secure credit. This is true especially for companies from the processing industry. Conditions for the granting of loans were zategnati, but interest rates fell. Bankers, however, know that also monitor the banks’ customers, „says Ulrich Shyurenkremer by Deutsche Bank.
This is explained by the fact that small companies are fully refinanced by banks. These are companies with a turnover between 20 and 50 million. These companies monitor very carefully how to keep the banking sector, he added.
Dangers lurk
The situation may deteriorate if you increase the number of companies in bankruptcy. Because along with that will increase the risk for banks. This will mean the transfer of new responsibilities and obligations of state bank lending Ka-TE-effective. However, this can not continue indefinitely, warns its director Ulrich Schröder.

If we increase our responsibilities too, it will exceed the opportunities for refinancing. Therefore there must be a reasonable limit to which this process can be extended to justify Schröder.