Bank loans in the European Union - statistics & facts
Bank lending constitutes an important industry in the European Union (EU) given that it is one of the most common ways for households, small and medium enterprises (SMEs), and other organizations to finance their large purchases or to expand their operations. In fact, in most member states of the EU, the total value of loans represented over 70 percent of their gross domestic product (GDP) as of late 2023. The value of loans granted by banks in some of those countries, including Denmark, Sweden, France, Spain, and the Netherlands, was greater than the overall size of their economy. Furthermore, loans and advances accounted for roughly 63 percent of bank assets in the EU in 2024, with mortgages and business loans being the segments with the highest market share.
Despite the higher interest rates, the outstanding value of loans in the EU have kept growing. As inflation remains relatively high, loans and other financing options are particularly important for households and companies to face their higher costs.
The role of bank loans in the economy of the EU
The EU has a large and diverse economy whose GDP reached nearly 16 trillion euros in 2022, an amount that was generated across its 27 member states. The population size and the high living standards of the EU turns it into a key consumer market. Bank loans support that part of the economy by helping consumers afford big purchases, including homes, cars, and other products that they could not pay for without relying on credit. Bank lending also supports businesses, which allows them to buy new equipment, pay-up costs, and continue growing. Loans to small and medium enterprises (SMEs) in Europe in 2023 were worth 2.48 billion euros, not far from the value of loans granted to the rest of non-financial corporations at 3.62 billion euros. Financing small businesses is an important tool for promoting entrepreneurship, which helps maintain a prosperous and dynamic corporate sector.How do interest rates vary across the Eurozone?
In 2024, Latvia, Estonia, and Lithuania had some of the highest interest rates in the Eurozone. In contrast, Malta and the Netherlands had relatively low interest rates on loans with short-term maturity. However, big variations can be observed depending on the type of loan considered. For example, long-term loans in the Netherlands were just slightly below the Eurozone average. Meanwhile, consumer loans usually have higher interest rates than mortgages or business loans. The maturity of the loans, and whether they have a floating rate or collateral guarantees are also key factors in determining the cost of borrowing.Despite the higher interest rates, the outstanding value of loans in the EU have kept growing. As inflation remains relatively high, loans and other financing options are particularly important for households and companies to face their higher costs.
