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Too Sunny to Borrow: Sunshine and Borrower Discouragement

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  • Jérémie BERTRAND

    (IESEG School of Management)

  • Laurent WEILL

    (LaRGE Research Center, Université de Strasbourg)

Abstract

We test the hypothesis that sunshine affects the discouragement of borrowing firms. Using a sample of about 45,000 firms from 124 countries, for the period 2010-2020, we find that higher sunshine is associated with a greater probability to be discouraged for the borrowing firm. We further establish that the discouraging impact of sunshine on the decision to apply for a loan is only observed in low latitude zones. We explain these findings by the fact that greater sunshine creates a negative mood in hot regions. Additional results suggest that managerial features affect the discouraging impact of sunshine.

Suggested Citation

  • Jérémie BERTRAND & Laurent WEILL, 2022. "Too Sunny to Borrow: Sunshine and Borrower Discouragement," Working Papers of LaRGE Research Center 2022-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    • Handle: RePEc:lar:wpaper:2022-05
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    More about this item

    Keywords

    access to credit; borrower discouragement; sunshine; developing countries.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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