MNI BRIEF: Japan Corp Loan Demand Rises: BOJ Survey

Demand for financing by Japanese corporates via commercial banks rose slightly from three months earlier, supported by higher sales and capital investment, the Bank of Japan’s senior loan officer opinion survey on bank lending practices showed Thursday.

The diffusion index for corporate fund demand – calculated by subtracting the number of banks reporting a decline in lending from those reporting an increase – edged up to +8 in January from +7 in October.

The index for expected fund demand over the next three months stood at +2, unchanged from the previous survey, suggesting the impact of December’s policy-rate hike to 0.75% from 0.50% on funding demand has been limited.

By firm size, the index for large companies was unchanged at +7, while demand from small businesses also held steady at +6.

Lingering concerns over higher borrowing costs following the BOJ’s December rate hike had been expected to weigh on fund demand, but the survey points to only a modest effect so far.

BOJ officials continue to closely monitor how higher borrowing costs are affecting financial conditions, fund demand and capital investment as they assess whether the current policy rate remains accommodative or has begun to turn restrictive. (See MNI BOJ WATCH: Board To Hold, Raise Growth Projection)