Funding Conditions - Stronger Loan Demand, Stable Standards

TopdownCharts
11-19

Funding Conditions

It’s also interesting to track the trends in reported loan demand (chart above) alongside lending standards (whether banks are increasing vs decreasing hurdles and scrutiny for approvals) AND monetary policy rates.

Loan demand typically will fall when economic conditions are poor and uncertainty is high, but also when interest rates are rapidly rising and at levels where the hurdle to return on investment is too high.

But the key takeaway on this second chart is: loan demand is recovering, lending standards are not tightening at any alarming rate, and interest rates are steadily declining — add to that tight credit spreads, and overall its a picture of much improved and generally supportive funding conditions for corporations (good for the growth and investment outlook).

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