What information does the euro area bank lending survey provide on future loan developments?

The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.

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Provider: 
ECBECB
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https://www.ecb.europa.eu//pub/economic-bulletin/focus/2023/html/ecb.ebbox202208_07~5f7ba986d9.en.htmlhttps://www.ecb.europa.eu//pub/economic-bulletin/focus/2023/html/ecb.ebbox202208_07~5f7ba986d9.en.html
Retrieved on: 
Monday, January 16, 2023
Information
Tags: 
The Review of Financial Studies, Review, Deutsche Bundesbank, Coronavirus, Altavilla, House, Journal, Securitization, COVID-19, Acceleration, Interest, BLS, Bank of France, Credit, Journal of Money, Credit and Banking, Risk, Supervision, Public sector, SAFE, Emirates Institute for Banking and Financial Studies, Growth, Access, Policy, ECB, Forecasting, Economics Bulletin, Journal of Banking and Finance, Jenny Hempel, Convention (norm), Cross, A, Euro, Housing, Loan, Security (finance), Bank, Bookkeeping, Real estate, Financial services, Maddaloni
Geotags: 
UKRAINE
Summary
Key Points: 
  • The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.
  • *By collecting this information, the survey sheds light on the transmission of monetary policy in the euro area via the bank lending channel.
  • While the survey information is qualitative, the replies of the banks are closely related to actual loan growth and lending rate developments.
  • *BLS data provide timely information on bank lending conditions and loan demand.
  • The short reporting lag compared with other statistical data means that BLS data provide early information on key lending developments in the euro area, which has been especially valuable for identifying turning points in lending conditions and assessing lending developments during exceptional periods.
  • [4] Overall, the BLS has proved to be a very useful tool for understanding and analysing bank lending conditions in the euro area.
  • A first indication of the information BLS indicators provide for future loan growth is to consider cross-correlations between BLS indicators at different leads relative to data on actual loan growth.
  • BLS indicators either lead loan growth (negative value on the y-axis) or lag loan growth (positive value).
  • Beyond the simple correlations mentioned above, the information that the BLS indicators provide on future loan growth can be assessed by analysing their value in forecasting actual loan growth.
  • Broadly corresponding evidence on the information that the BLS provides regarding future loan growth is also found for individual euro area countries.
  • The BLS contains information on future loan growth not only at the aggregate level, but also for individual banks.
  • Loan demand also helps predict future housing loan growth at the bank level – banks reporting a decrease in demand experience lower loan growth over the following quarters compared with banks reporting unchanged or increased loan demand (Chart D, panel b).
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