MNI BRIEF: Japan Corporate Loan Demand Drops - BOJ Survey

Demand for bank financing from Japanese corporations declined compared to three months ago, as customers increased internally generated funds and found easier access to alternative sources, according to the Bank of Japan’s Senior Loan Officer Opinion Survey on Bank Lending Practices, released Thursday.

Smaller firms cited a rise in lending rates as a key factor behind the drop in fund demand.

The sub-index measuring corporate fund demand, calculated by subtracting the number of banks reporting weaker lending from those reporting stronger lending, declined to +8 in July, down from +10 in April.

The index measuring expected fund demand over the next three months slipped to +3 from +4 in the previous survey, suggesting that businesses remain cautious and are holding back on new financing amid persistent uncertainty.

The index measuring fund demand from large enterprises declined to +7 from +10 in April, while the index for small and medium-sized businesses fell to zero from +4 previously.