euro area banks. In the current survey round, the sample group of banks participating in the
survey comprises 137 banks, representing all of the euro area countries, and takes into account
the characteristics of their respective national banking structures. The main purpose of the BLS
is to enhance the understanding of bank lending behaviour in the euro area.
2
The questions distinguish between three categories of loan: loans or credit lines to enterprises;
loans to households for house purchase; and consumer credit and other lending to households.
For all three categories, questions are asked on credit standards for approving loans; credit terms
and conditions; and credit demand and the factors affecting it.
The survey questions are generally phrased in terms of changes over the past three months (in
this case in the fourth quarter of 2014) or expectations of changes over the next three months
(i.e. in the first quarter of 2015).
The responses to questions related to credit standards are analysed in this report by focusing on
the difference (“net percentage”) between the share of banks reporting that credit standards have
been tightened and the share of banks reporting that they have been eased. A positive net
percentage indicates that a larger proportion of banks has tightened credit standards (“net
tightening”), whereas a negative net percentage indicates that a larger proportion of banks has
eased credit standards (“net easing”). Likewise, the term “net demand” refers to the difference
between the share of banks reporting an increase in loan demand and the share of banks
reporting a decline. Net demand will therefore be positive if a larger proportion of banks has
reported an increase in loan demand, whereas negative net demand indicates that a larger
proportion of banks has reported a decline in loan demand.
In order to describe the developments of survey replies over time, the report refers to changes in
the “net tightening” or “net easing” of credit standards from one survey round to another. For
example, a lower net percentage of banks tightening their credit standards between two survey
waves would be referred to as a “decline in net tightening”. Similarly, higher net percentages of
banks indicating a decline in loan demand between two survey waves would be referred to as a
“more pronounced net decline in demand”.
In addition, an alternative measure of the responses to questions related to changes in credit
standards and net demand is included. This measure is the weighted difference (“diffusion
index”) between the share of banks reporting that credit standards have been tightened and the
share of banks reporting that they have been eased. Likewise, regarding the demand for loans,
the diffusion index refers to the weighted difference between the share of banks reporting an
increase in loan demand and the share of banks reporting a decline. The diffusion index is
constructed in the following way: lenders who have answered “considerably” are given a weight
twice as high (score of 1) as lenders having answered “somewhat” (score of 0.5). The
interpretation of the diffusion indices follows the same logic as the interpretation of net
percentages.
The results of the individual banks participating in the BLS sample are aggregated in two steps:
in a first step, individual bank results are aggregated to national results for the euro area
2
For more detailed information on the bank lending survey, see the ECB press release of 21 November
2002 entitled “Bank lending survey for the euro area”; the article entitled “A bank lending survey for
the euro area” in Monthly Bulletin, ECB, April 2003; and J. Berg et al., “The bank lending survey for
the euro area”, Occasional Paper Series, No 23, ECB, 2005.
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