Credit standards and capital allocation in a low interest rate environment

Using firm-level data from surveys and financial statements, this paper presents an analysis of credit standards, capital allocation and financial conditions of non-financial enterprises in Denmark since the beginning of the financial crisis. The analysis indicates that low interest rates and increased competition among financial intermediaries have not lead to significant easing of credit standards for the least creditworthy firms. The current credit standards to a large extent still contribute to allocating loan capital to the most solvent and productive firms. Furthermore, the analysis indicates that Danish firms' credit demand is relatively limited, and that they have relatively good access to finance in comparison with firms in other countries.