The new survey conducted by the Institute of International Finance in June pointed to a net deterioration in overall emerging market bank lending conditions for a fourth straight quarter. Around 48% of the respondents indicated a tightening in international funding conditions, suggesting that the positive effect of the policy measures taken by the ECB in end-December and February have started to fade over the last quarter. Based upon inputs received from 132 banks domiciled in emerging economies, the results show a significant rise in non-performing loans — a trend that is expected to persist in the months ahead.

Credit standards continued to tighten over the past quarter as banks become more cautious in their lending activities. The tightening in credit standards was more pronounced in Emerging ASIA.