What credit crunch? ECB data shows interbank lending up since august.

[patslatt]

Video - CNBC.com

The argument is that most financially sound firms and consumers are prudently reducing borrowing in response to the recession. The need of large financially unsound firms to increase borrowing created the false impression of a credit crunch. Financially sound firms and consumers can still obtain plenty of credit. ECB statistics show interbank lending,a good credit indicator, has been rising since august.

[Middleaged]

It was interesting to hear the information that AIB and BOI gave the Oireachtas Committee on Finance and Public Service yesterday.

AIB said that outstanding loans to SME's has risen by 6% to €9.5bn with overdrafts are up 11% to €3bn. The bank went on to say that the lending criteria employed by the bank had changed, and it was only lending to those businesses that looked as if they would make it through the recession.

BOI mirrored this by saying that 80% of applications were successful and had advanced €1.5bn to SME's over the last 3 months, with overdrafts staying static at €2.6bn

These look like large numbers and it would appear that businesses with weak balance sheets and poor prospects will be allowed to fail.

Anybody have information to either counter or confirm these practises?

[junketman]

Banks are commercial businesses too. They are right to be choosy about who they lend to, we don't want a repeat of the subprime mess in Ireland with lending to businesses who have no way or repaying thus leading to toxic loans.

[20000miles]

I posted this a while back with regards to interbank lending in the US -

There's a working paper by the Minneapolis Fed entitled Facts and Myths about the Financial Crisis of 2008 which claims to bust the following commonly held beliefs:

[FONT=TTdcr10]1. Bank lending to nonfinancial corporations and individuals has declined sharply.[/FONT]
[FONT=TTdcr10]2. Interbank lending is essentially nonexistent.[/FONT]

[FONT=TTdcr10]3. Commercial paper issuance by nonfinancial corporations has declined sharply, and [FONT=TTdcr10]rates have risen to unprecedented levels.[/FONT]

[FONT=TTdcr10]4. Banks play a large role in channeling funds from savers to borrowers.[/FONT]

[FONT=TTdcr10]Its a short pdf with plenty of graphs to illustrate the point.[/FONT]

[FONT=TTdcr10][COLOR=#0000ff]http://www.minneapolisfed.org/research/WP/WP666.pdf[/COLOR][/FONT]

[FONT=TTdcr10]Could it be that there is no interbank lending crisis in the UK either? Food for thought?[/FONT]

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