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Individual Credit Market Experience and Beliefs about Bank Lending Policy: Evidence from a Firm Survey

Author

Listed:
  • Jarko Fidrmuc
  • Christa Hainz
  • Werner Hölzl

Abstract

We study how firms’ individual credit market experience influences their beliefs about the bank lending policy, using the Austrian Business Survey between 2011 and 2016. Firms which have recently experienced a loan rejection are more likely to believe that the lending policy is restrictive. We see similar effects for firms who were granted loans, but with conditions worse than anticipated. Exploiting the panel structure shows that firms without recent credit market experience are less likely to change their beliefs, which converge towards the middle category. Our findings are in line with theories of rational inattention and with asymmetric experience effects.

Suggested Citation

  • Jarko Fidrmuc & Christa Hainz & Werner Hölzl, 2023. "Individual Credit Market Experience and Beliefs about Bank Lending Policy: Evidence from a Firm Survey," ifo Working Paper Series 392, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_392
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    References listed on IDEAS

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    More about this item

    Keywords

    Formation of beliefs; rational inattention; pessimism; persistence; behavioral macroeconomics;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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