Bank of Japan survey sees record demand for corporate loans amid worsening COVID-19 situation

Major Japanese banks saw record demand for the corporate loans that were offered since April as the COVID-19 pandemic continues to have companies rushing in to build up cash reserves, according to a central bank survey on Friday.

The figures underline the extent of the damage the coronavirus and measures to contain the outbreak have done to the world’s third-largest economy, which is struggling with its worst postwar recession.

The diffusion index, a gauge of companies’ demand for funds at commercial banks, reached over 59 in July, rising from over 14 in April, the Bank of Japan’s (BOJ) quarterly survey showed – the highest level since the central bank started compiling the data in 2000.

The government had recently rolled out massive stimulus packages to soften the economic impact of the pandemic, while the BOJ eased monetary policy twice this year in order to inject funds into small, cash-strapped businesses.