Demand for funds has improved markedly among small and midsize firms, according to a Bank of Japan survey released Friday.

The survey, conducted earlier this month on 50 major banks, shows the diffusion index of fund demand rose 16 points to minus 7 from the previous survey in July.

Of the total companies surveyed, the index for small and midsize firms rose 19 points to minus 1, it said.

Behind the rise were moves by companies to revise upward their capital investment plans and borrow money sooner rather than later as long-term interest rates began to rise, analysts said.

The latest BOJ survey shows that even small firms are beginning to experience signs of economic recovery, the analysts said.

The index is calculated by subtracting the percentage of banks reporting deterioration in fund demand from that of banks reporting improvements.

Demand for funds among individuals also remained strong, especially for mortgage loans, with the index rising 8 points to 16, the survey shows.

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