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Japan corporate loan demand grows sharply amid virus crisis

The rise also came as companies moved to increase their cash reserves to prepare for the possibility of a deeper economic downturn amid the coronavirus crisis. (AFP)
The rise also came as companies moved to increase their cash reserves to prepare for the possibility of a deeper economic downturn amid the coronavirus crisis. (AFP)
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21 Apr 2020 12:04:45 GMT9
21 Apr 2020 12:04:45 GMT9

TOKYO: Demand for bank lending among companies in Japan increased sharply in January-March, chiefly as small and midsize businesses faced funding difficulties due to the economic impact of the coronavirus pandemic, a Bank of Japan survey showed Tuesday.

The rise also came as companies moved to increase their cash reserves to prepare for the possibility of a deeper economic downturn amid the coronavirus crisis, according to the central bank.

The diffusion index for corporate loan demand grew to plus 14 from plus 2 in the previous October-December survey, the BOJ said.

The DI for the loan demand outlook for the next three months stood at a record plus 46, higher than the plus 43 marked in the aftermath of the global financial crisis of 2008, the BOJ said.

"Large companies are now facing funding needs in addition to small and midsize businesses as the Japanese government has introduced full-fledged measures against the coronavirus, including a state of emergency," a BOJ official said, suggesting that corporate loan demand is expected to increase further.

The DI represents the percentage of banks seeing stronger loan demand minus that of those facing weaker demand.

The latest survey was conducted between March 10 and April 10, covering the country's top 50 banks in terms of outstanding lending.

JIJI Press

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