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Firms’ access to finance and the business cycle: evidence from the SAFE

Author

Listed:
  • Durante, Giada
  • Ferrando, Annalisa
  • Munch Grønlund, Asger
  • Reinelt, Timo

Abstract

This box looks at the link between firms’ financing conditions and the euro area business cycle. For information on financing conditions of firms, the box uses results from the Survey on the Access to Finance of Enterprises (SAFE). Monetary policy is shown to affect changes in firms’ financing gaps – the difference between the change in demand for and the change in the availability of external financing – as well as their expectations about future availability of finance. At the current juncture, firms report increasing financing gaps and a deterioration in their expectations about the availability of finance in the period ahead. Such responses from firms are associated with stronger concerns about finance at the firm level. Moreover, financing conditions matter for the aggregate business cycle: increasing financing gaps and lower expected availability of finance foreshadow lower GDP growth. JEL Classification: D22, E32, E44, E52

Suggested Citation

  • Durante, Giada & Ferrando, Annalisa & Munch Grønlund, Asger & Reinelt, Timo, 2023. "Firms’ access to finance and the business cycle: evidence from the SAFE," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2023:0008:5
    Note: 235236
    as

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    More about this item

    Keywords

    business cycles; Financing conditions; monetary policy transmission; survey data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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