In recession, "Are loans lower because of demand or supply?"
This question is bothering me a lot. My thoughts are - We know that money can/is printed by banks so it doesn't seem like it is money supply problem but then my reading from newspapers tells me that it is the banks which stops lending perhaps due to realization that business firms will have a hard time so probability of low profits and therefore stops credit and as a result investment suffers. or Is it the other way round that Investment stops due to low demand hitting its profits and then banks responds to prevent building of Non performing assets?
I am lacking clarity. Kindly, help.