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# Introduction of Diffusion Indexes to the "Senior Loan Officer Opinion Survey on Bank Lending Practices at Large Japanese Banks"

April 26, 2001
Bank of Japan

The results1 of the "Senior Loan Officer Opinion Survey on Bank Lending Practices at Large Japanese Banks" will be presented in the form of indexes (diffusion indexes, hereafter DI), rather than as averages, and published in a new table format from the release of the April 2001 survey results.

1. Diffusion indexes have been introduced for the results of 10 questions (all questions except questions 4, 5, and 10).

The aim of introducing diffusion indexes is to facilitate better understanding of the survey results.

In the new table format, each DI shows the respondents' opinions on a scale from -100 and 100. Zero shows that their view of the current situation has not changed from the last survey. When the DI figures change in a positive/negative direction in answers to the questions asking about changes in loan officers' views from the last survey, this indicates that the results are stronger/weaker, have increased/decreased, or have eased/tightened.

The DI figures are calculated using the following formula.

• The DI for demand for loans in questions 1, 2, 3, and 6:
(percentage of respondents selecting "substantially stronger" + percentage of respondents selecting "moderately stronger" * 0.5) - (percentage of respondents selecting "substantially weaker" + percentage of respondents selecting "moderately weaker" * 0.5)
• The DI for credit standards in questions 7 and 11:
(percentage of respondents selecting "have eased/will ease considerably" + percentage of respondents selecting "have eased/will ease somewhat" * 0.5) - (percentage of respondents selecting "have tightened/will tighten considerably" + percentage of respondents selecting "have tightened/will tighten somewhat" * 0.5 )
• The DI for terms and conditions of loans in questions 8 and 12:
(percentage of respondents selecting "have eased/will ease considerably" + percentage of respondents selecting "have eased/will ease somewhat" * 0.5) - (percentage of respondents selecting "have tightened/will tighten considerably" + percentage of respondents selecting "have tightened/will tighten somewhat" * 0.5 )
• The DI for spreads of loan rates in questions 9 and 13:
percentage of respondents selecting "has increased/will increase" - percentage of respondents selecting "has decreased/will decrease"