Japan bank lending spiked at record pace in June amid COVID-19 crisis

Japanese bank lending spiked at the most rapid yearly pace in June as firms attempt to store funds to deal with the drastic repercussions of the COVID-19 pandemic. The Bank of Japan said on July 8 that the inflow of cash at financial institutions have grown to an all-time high as the major companies have stored the borrowed cash as a precautionary measure to match the circumstances that could have been created by the unprecedented coronavirus outbreak. 

Furthermore, the increase noted by the BOJ suggests that the companies are still rocked by the effects of the coronavirus outbreak even though the Japanese government has lifted most of the restrictions imposed to curb the spread of the fatal disease back in late May. According to the BOJ report, the total bank lending by banks and “shinkin” credit unions spiked 6.2 per cent in June 2020 from 2019 to reach a record $5.3 trillion. This was followed by a gain of 4.8 per cent in May that marked the fastest pace of growth since 2001.

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‘Due to pandemic’

According to international media reports, the Japanese bank official said at the press briefing that ‘corporate fund demand is heightening due to the pandemic’. As per the same BOJ data released on July 8 that total deposit of city and regional banks spiked to 8 per cent to reach a record 786.1 trillion yen due to hike in deposits from companies, public entities as well as households. While households in the country managed to save the cash attained by government policies, big firms had parked the funds they lent as a precaution to bank deposits. 

Meanwhile, as per Johns Hopkins University tally Japan has now recorded at least 20,137 total infectious of coronavirus with less than a thousand reported deaths. Even though the numbers of the coronavirus contagion in the country proves that the crisis are still controlled, it pushed the country into a deep recession. The COVID-19 pandemic has also prompted the government in Japan to come up with a big stimulus package and the BOJ to ease policy in March and in April.

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Inputs: Agency/Image: AP