to achieve a similar effect on the rates banks apply to corporate loans. moreover, lending rates to nfcs fell by some 110 – 140bps in major vulnerable member states, suggesting that the pass - through of the ecb ’ s policy stance has become stronger in those countries that were hit hardest by the crisis and where economic slack was concentrated. this decline in fragmentation can be in part explained by the effects of the tltros. evidence from the bidding behaviour of banks confirms that tltros participation is frequently followed by a compression in lending rates. that is linked to tltro borrowers scaling back their recourse to more expensive wholesale funding, in particular unsecured, which has created scope for banks to reduce lending rates. the transmission of the improvement in banks ’ funding conditions to lower bank lending rates has been further empowered by an increase in lender competition for good credit spurred by our measures. the app has reinforced this fall in bank lending rates, too, by putting strong downward pressure on sovereign yields and thereby reducing the attractiveness of sovereign securities holdings relative to loans. indeed, alongside the direct impact of tltros on bank lending bis central bankers ’ speeches conditions, staff analysis finds that the app has had an indirect effect on bank lending conditions through its marked effect on long - term government bond yields. 1 this indirect effect has been further reinforced by the beneficial impact of lower long - term yields on the macroeconomic outlook and hence on the credit component embedded in lending rates. with bank lending rates lower, the volume of loans to nfcs is now recovering in the euro area as a whole as well. in may last year, before the announcement of the credit easing measures, loans to nfcs contracted at an annual rate of 2. 9 % in the euro area as a whole. since july 2015, however, the year - on - year contraction has stopped and loans have started to grow at a very modest rate just above zero. as a result, fewer small and medium - sized companies ( smes ) report that credit has been a limiting factor for their businesses. in fact, the last results of the survey on the access to finance of enterprises ( safe ), conducted in april this year, show that “ access to finance “, which was considered the dominant concern of smes in 2012, is now considered the least important problem. “ finding customers ” is instead still a primary source of concern for smes. these results mask some heterogeneity : in the major

vulnerable member states loans are still contracting compared to a year ago. but the pace of contraction has slowed considerably in these economies. this reflects both improved funding conditions for banks thanks to the tltros and app, and strengthening demand for loans amid an improving economic outlook and lower lending rates. loan supply can be expected to benefit further from the staggered impact of tltros. the app should also continue to support credit growth going forward. banks gain additional liquidity from the app either through selling marketable assets or through rising customer deposits, which they can in turn use for refinancing, purchasing assets or granting loans. in their responses to the october 2015 bank lending survey, most euro area banks indicated that they had used the additional liquidity from the app for the latter – granting loans ( about 30 % ) – and over the coming six months, this pattern can be expected to continue. banks also indicated a net easing impact from the app on their credit standards over the past six months ( loans to enterprises : – 4 %, housing loans : – 2 %, consumer credit and other lending to households : – 1 % ). and over the next six months, banks expect a continued easing impact on credit standards for loans to enterprises ( – 2 % ), while the effect on credit standards on housing loans and consumer credit is expected to remain broadly unchanged. altavilla c., g. carboni, r. motto ( 2015 ) asset purchase programmes and financial markets : lessons from the euro area, ecb working paper no. 1864. bis central bankers ’ speeches chart 1 use of additional liquidity and impact of the app on bank lending notes : the net percentages are defined as the difference between the sum of the percentages for “ tightened considerably ” and “ tightened somewhat ” and the sum of the percentages for “ eased somewhat ” and “ eased considerably ”. the results shown are calculated as a percentage of the number of banks which did not reply “ not applicable ”. bis central bankers ’ speeches the effects of app appear to be stronger still when looking at the impact on credit terms and conditions ( loans to enterprises : – 29 %, housing loans : – 13 %, consumer credit and other lending to households : – 22 % ; see chart 24b ), and the reported easing in terms and conditions for enterprises is generally larger than reported in the previous survey round. this favourable impact is also expected to continue over the next six months. one should keep in mind, however, that these