Supply and demand in the European credit market during the recent crisis

The recent financial crisis in Europe has been followed by a significant decrease in credit flows to nonfinancial enterprises. This article investigates demand and supply of loans using data from surveys. Our econometric analysis suggests that recent <italic>European Central Bank</italic> (ECB) policy has favoured the credit market. Although bank credit standards are tighter than usual, the present low‐credit growth is more the consequence of a weak demand for loans than a reduced supply from the banking system.