Demand for loans among companies fell to a four-year low as a slowing economy and costlier materials made businesses reluctant to borrow, the Bank of Japan said Tuesday.
An index of corporate loan demand dropped to minus 14 this month from minus 2 in April, the lowest since July 2004, according to the BOJ's quarterly survey of loan officers in Tokyo.
"This indicates sluggish growth in business investment, wages and hiring," said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo. "Companies can't be confident about borrowing money amid the higher costs."
Loan demand among large companies declined to minus 4 in July from 4 three months ago, Tuesday's survey showed. The index for midsize companies slid to minus 8 from 1, and dropped for small businesses to minus 16 from minus 4.