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Demand flat, small amount of banks ease terms, October Loan Survey says
By Sara Rosenberg
New York, Oct. 31 - Demand for commercial and industrial loans was basically unchanged over the past three months and only a small percentage of banks eased lending standards and terms on loans, according to the October Senior Loan Officer Opinion Survey on Bank Lending Practices.
Slightly less than 10% of respondents said their lending standards to large and middle-market firms and to small firms eased over the past three months, but larger fractions of banks reported having eased many loan terms to borrowers of all sizes.
Of those that reported having eased either standards or terms, almost all pointed to more aggressive competition from other banks or nonbank lenders as an important reason for the change.
The survey also asked respondents about the rapid loan growth at commercial banks over the past year. Some suggested that weaker foreign and domestic competition contributed to loan growth at their banks, while other institutions pointed to decisions to diversify the bank's portfolio or to expand into new business lines. About one third of the domestic banks that responded to this question indicated that the replacement of nonbank debt accounted for less than 25% of the increase in loans at their banks.
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