Dr. Robert Kelly:

I cannot speak to individual cases. Retail banks make commercial decisions when they are making individual decisions. However, I can take a step back and try to set a bit of context when we think about the aggregates. I can give the Deputy a sense of what is happening in the banking system even though that might not reflect individual people's engagement with the banking system.

I will start with firms. In the past few years, we have seen credit conditions tighten. Interest rates have gone higher; that is part of the cycle with monetary policy. However, we have seen very little reduction in lending to firms. What we have seen is a substitution. This goes to some of the points the Deputy was making. There is now less lending for investment which makes perfect sense from a monetary policy point of view. We would expect less demand for investment at this point in the cycle. However, we have seen an uptick in working capital. The banks are lending almost the same amount to the SMEs, the firms of Ireland, but we are seeing a substitution from perhaps thinking about expanding their business to now thinking about more short-term pressure on their payments, overdrafts and all of that. We have seen this substitution effect happen.

The second part is we have also seen an evolving financial system. Previously, it was very much a bank-driven credit-to-firms piece but now the non-bank lenders have a big role to play in lending to firms in particular.

In the construction sector, 35%, or over one third, of lending comes from non-bank lenders, which one might not think of as traditional banking sources. They operate in a different segment of the market. They almost operate in some of the areas the Deputy spoke to. They will give higher loan-to-cost ratios, for example. It costs more but it is higher risk compared with other forms of lending. We are seeing a more diverse pool of lenders. We are also seeing a broadening of some traditional lending. We have seen the credit union sector broaden from a more traditional base into mortgages and even some firm lending. We are seeing quite a change in the financial system.

I am not for one minute saying there are not individual circumstances that are hidden in this aggregate, but one of the things coming out of the crisis was that we wanted to develop our understanding of what is facing firms with regard to the demand for credit, rejection rates and what they are looking for. The Department of Finance regularly does a credit demand survey. It indicates that firms are not reporting an uptick in demand for credit. Much research has been done across institutions here to understand that better. It may be a scarring effect, for example, They do not have the demand for credit. When we survey firms, we are not seeing in the aggregate that they are saying rejection rates are much higher. They are actually saying they are quite conservative about using their own capital to invest relative to lending. The demand for credit is not increasing strongly relative to that supply. We are not seeing evidence in the aggregate. It will not necessarily talk to individual cases and obviously I cannot talk to such cases. To give a sense across the system, we have an evolving financial system which is interacting with firms and what credit and financing they need slightly differently.