Banks are tightening access to credit, according to a study by the ECB

Eurozone banks plan to significantly restrict companies’ access to credit in the second quarter due to the economic impact of the war in Ukraine, which greatly reduces risk tolerance. That’s according to a study by the European Central Bank (ECB), quoted by Reuters. Record rise in inflation in the Eurozone

The conflict in Ukraine and accelerating inflation have led monetary policymakers to fear a reduction in bank lending, which will negatively affect corporate investment and the ability of households to offset the impact of rising prices on disposable income.

Banks’ internal lending criteria have already been tightened in the first quarter amid rising perceptions of risk in the sector related to inflation and ongoing disruptions in supply chains, the ECB said.

The second quarter is expected to be even more difficult, as banks are also seeking to protect their finances from the effects of the Russia-Ukraine conflict.

Banks expect significantly tighter lending criteria for businesses, which will reflect concerns about the effects of the war in Ukraine and expectations of a tighter monetary policy, the ECB explained in its quarterly report on eurozone lending.

In addition, banks expect a moderate tightening of the criteria for granting loans for the purchase of real estate, consumer loans and other loans to households.

However, demand for loans continued to grow in the first quarter and the ECB expects demand for loans to increase in the second three months of the year, while demand for real estate is expected to decline. ECB: Events in Ukraine will keep inflation in the eurozone high for a long time

The ECB’s study was published ahead of a meeting of the Monetary Policy Committee on April 14, after which the bank could give details of its intentions to normalize its strategy, as fighting inflation is already a priority.

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