What do we learn about current developments in the bank lending market in Japan from BOJ's Senior Loan Officer Opinion Survey?

The Senior Loan Officer Opinion Survey on bank lending practices at large Japanese banks (hereafter the 'loan survey') provides us with quantitative information on banks' views on the funding needs of firms and households as well as their own lending attitudes, which could not be grasped from traditional loan statistics. For instance, the loan survey confirms that the funding needs of firms have been stagnant reflecting sluggish fixed investment. Also, it shows that banks' efforts to widen spreads between loan rates and their own funding costs have gradually made progress to some extent. In particular, more and more banks find it less difficult to widen spreads on loans to firms with medium and low credit ratings. The Bank of Japan seeks room for enhancing the usefulness of the loan survey, particularly in terms of questionnaire content and the aggregation of responses from banks. The Bank of Japan continues to make every effort toward making the loan survey more important statistics to assess developments of commercial lending as well as overall economic activity.