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At the same time, banks' ability and willingness to lend to businesses, although still at a higher level than 10 years ago, has shrunk from 90.4 points last year to 88.34 points this year due to structural changes in the industry.

"The shadow economy, corporate tax avoidance and capital of unknown origin remain major factors influencing banks' ability and willingness to lend to businesses. With the wish to leave Latvia out of Moneyval's grey list, the banks are now more carefully than ever assessing whether the company's credit application does not show signs of a predicated crime, thereby making it necessary for businesses to implement fair business practices that are in the interest of the society as a whole. At the same time, there are also a number of lending-stimulating trends: the number of late payments has decreased and the slight decrease in the number of proposed insolvency proceedings for legal entities indicates an improvement in corporate financial health,” said Karlis Danevics, co-chair of the Finance Latvia Association Lending Committee and a member of the board at SEB Bank.

However, the ability of the top Latvian commercial banks to lend to companies has not diminished and the overall lending climate has even become more favorable, as evidenced by the increase in the loan-to-deposit ratio, said Danevics.