Japanese bank lending jumps to highest level in four years

Outstanding loans rise 1.9% in June year-on-year.

The Bank of Japan said this was the 20th straight month of increase and the biggest gain since July 2009. Borrowing for investment in real-estate trust funds, and overseas mergers and acquisitions also rose following a 1.8% rise in May.

Analysts said the recent increase in demand for funds is related to mortgage lending and the housing market, and expect bank lending to continue to increase steadily as part of the portfolio rebalancing the BOJ is encouraging.

The data is a shot in the arm for the BOJ, the central bank, which hopes its controversial and aggressive stimulus plan will encourage banks to funnel money to lending and risky assets instead of favoring low-risk, low-return government bonds. It forms part of BOJ’s strategy to push growth and end years of persistent deflation.

On April 4, BOJ implemented a massive monetary stimulus, pledging to double its holdings of government bonds and boost purchases of risky assets to achieve its 2% inflation target in two years.