Bank lending during recessions - statistics & facts
During economic recessions the volume of new loans granted generally decreases or slows its growth. There are several factors that play into this. Demand for loans tends to be lower during times of economic uncertainty. The worry about layoffs, unemployment, and reduced disposable income makes consumers more prone to save their money. Companies also tend to be more conservative with their spending if they are unsure about their growth expectations. On the supply-side, banks usually provide less loans and focus instead on less riskier assets such as government bonds. For example, over a third of loan applications by Greek SMEs were rejected in 2011, during the economic crisis that started in 2007, a much higher rate than in 2019.
