Europe stands out as the region that will experience the highest constraints on bank lending, Standard & Poor's said in a new study."There are significant differences between the lending growth capacities of banking systems in different countries, mainly because of differences in earning generation capacity and existing capital constraints," S&P said."Generally speaking, higher capital bases translate into lower returns on equity and reduced capacity for banks to increase their lending volumes organically. "No banking system is currently in a position to finance a double-digit increase in its loan volumes without impairing its capital base. "This means, absent a regular capital injection, banking systems will be structurally unable to cope with the double-digit growth in corporate financing needs that we expect in a number of developing economies."Given the region's current high reliance on banks for funding, the question becomes where the financing of the European economy will come from. "While improvements in regulatory capital ratios should allow European banks to reverse the ongoing multiyear deleveraging trend within the next 18 months, weak internal capital generation will still weigh on lending capacity. "We estimate that countries in the eurozone's periphery will be able to expand their loan portfolios by less than two per cent per year in the coming five years.""This figure nonetheless suggests continued severe restriction on credit availability. Small and midsize companies are likely to continue to have more difficulty accessing credit than their larger counterparts."Overall, eurozone banks would be unable to maintain their share of financing if corporate financing needs accelerate," S&P said.