Figure 2: Corporate insolvencies in Germany  Very low interest rates could affect the allocation of resources in the real economy. Low interest rates and easy credit conditions provide incentives to invest and thereby foster business dynamics. Yet, despite stable GDP (Gross Domestic Product) growth, Germany, like many other advanced economies, experienced a slowdown in business dynamics.
[5] Several structural factors, including demographic change and a decrease in the diffusion of knowledge, play a role. There are two channels through which easy financing conditions could have dampened business dynamics. First, very low interest rates could keep financially weak firms in the market. [6] Weak banks with a high share of nonperforming loans on their books might exacerbate this effect.