The recent turbulence on money markets is likely to lead to a tightening of credit by euro zone banks, according to the findings of a European Central Bank survey.
The results of the survey, released today, show that big companies will be most affected by this tightening of purse strings.
'Nearly 50% of the banks said that the credit market events were expected to contribute to a tightening of credit standards for loans and credit lines to large enterprises over the next three months,' the survey said.
Loans to businesses would be affected much more than loans to households, and the effect would be felt mostly by large companies seeking funds for acquisitions and restructuring, it added.
In August, fears about the US market for high-risk home loans erupted as several major banks and financial groups reported large losses linked to mortgage-backed securities.
The ensuing shockwave, which triggered sharp falls on global stock markets, forced many banks to tighten their lending standards, which in turn sparked a credit crunch.
'The tightening seemed mainly to affect large transactions, such as loans granted to finance acquisitions,' ECB president Jean-Claude Trichet said yesterday.
Lending to households was also affected by a deterioration of housing market prospects in countries like France and Spain, the ECB said, and by expectations that economic activity would slow later this year.
