At the same time, the deteriorating situation of firms and particularly the uncertainty surrounding their economic outlook also made banks increasingly reluctant to grant loans to SMEs. Moreover, the financial crisis has put a strain on banks’ balance sheets, leading them to increasingly tighten the terms and conditions for granting credit.
Therefore, the combination of lower demand for loans, on the one hand, and tighter credit supply conditions, on the other hand, has led to a decline in the annual growth rate of loans to enterprises. In the euro area loan growth declined from 17.5% in the last quarter of 2008 to about 2% in the third quarter of 2009.