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Borrower discouragement prevalence for Eurozone SMEs: Investigating the impact of economic sentiment

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  • Anastasiou, Dimitris
  • Kallandranis, Christos
  • Drakos, Konstantinos

Abstract

We investigate whether economic sentiment exerts an impact on firms’ decision to apply for a bank loan or not and hence its impact on discouragement prevalence. Using survey data for Eurozone firms and employing a Probit Heckman selection model, we document that a positive shock in economic sentiment lowers the percentage of discouraged bank borrowers in the economy. In contrast, higher economic sentiment shock volatility leads to an increase in discouragement.

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  • Anastasiou, Dimitris & Kallandranis, Christos & Drakos, Konstantinos, 2022. "Borrower discouragement prevalence for Eurozone SMEs: Investigating the impact of economic sentiment," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 161-171.
    • Handle: RePEc:eee:jeborg:v:194:y:2022:i:c:p:161-171
    DOI: 10.1016/j.jebo.2021.12.022
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    Cited by:

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    5. Dimitris Anastasiou & Apostolos Katsafados, 2023. "Bank deposits and textual sentiment: When an European Central Bank president's speech is not just a speech," Manchester School, University of Manchester, vol. 91(1), pages 55-87, January.
    6. Ferrando, Annalisa & Mulier, Klaas, 2022. "The real effects of credit constraints: Evidence from discouraged borrowers," Journal of Corporate Finance, Elsevier, vol. 73(C).
    7. Kallandranis, Christos & Anastasiou, Dimitrios & Drakos, Konstantinos, 2023. "Credit rationing prevalence for Eurozone firms," Journal of Business Research, Elsevier, vol. 158(C).
    8. Katsafados, Apostolos & Anastasiou, Dimitris, 2022. "Short-term Prediction of Bank Deposit Flows: Do Textual Features matter?," MPRA Paper 111418, University Library of Munich, Germany.
    9. Birindelli, Giuliana & Chiappini, Helen & Jalal, Raja Nabeel-Ud-Din, 2023. "SFDR, investor attention, and European financial markets," Finance Research Letters, Elsevier, vol. 56(C).
    10. Anastasiou, Dimitris & Drakos, Konstantinos & Kapopoulos, Panayotis, 2022. "Predicting international tourist arrivals in Greece with a novel sector-specific business leading indicator," MPRA Paper 113860, University Library of Munich, Germany.

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    More about this item

    Keywords

    Discouraged bank borrowers; Sentiment shock; Sentiment shock volatility; European SMEs; Heckman Selection; Uncertainty;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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