RTTNews - Demand for bank loans by Japanese firms and households decreased over the past three months, results of a quarterly survey conducted by the Bank of Japan revealed Wednesday.

An index measuring the demand for loans by businesses fell to minus 14 in July from 13 in April as companies started depending improved credit market for funding.

A gauge for households' loan demand deteriorated to minus 14, the lowest since the survey was started in April 2000, from minus 4 due to weak consumer spending in the face of crisis and rising unemployment.

The survey revealed that Japanese banks are now more willing to lend to companies than they were three months ago. An index of banks' willingness to lend money to large businesses rose to 5 in July from minus 1 in April. The measure for banks' willingness to lend to medium-sized firms rose to 11 from 6.

To address the credit crisis, the BoJ lowered its key interest rate to 0.1% in December 2008 and started buying corporate debt from lenders. Moreover, the central bank has been providing unlimited credit to commercial banks to fund companies.

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