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Can the tone of central bankers’ speeches discourage potential bank borrowers in the Eurozone?

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  • Anastasiou, Dimitris
  • Krokida, Styliani-Iris
  • Tsouknidis, Dimitris
  • Drakos, Konstantinos

Abstract

The discouragement of potential bank borrowers is a credit market outcome, where discouraged firms are those who need bank credit but do not apply for it due to fear of rejection. Discouragement may arise from behavioural factors shaping firms’ perceptions of the probability of being rejected. We examine whether central bank communication, captured by the tone of central bankers’ speeches, affects the observed discouragement likelihood. The results document a robust negative relationship between the tone of central bankers’ speeches and borrowers’ discouragement across Eurozone countries. This result remains intact in the presence of a wide set of firm-specific and macroeconomic control variables and robustness tests.

Suggested Citation

  • Anastasiou, Dimitris & Krokida, Styliani-Iris & Tsouknidis, Dimitris & Drakos, Konstantinos, 2023. "Can the tone of central bankers’ speeches discourage potential bank borrowers in the Eurozone?," Journal of International Money and Finance, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:jimfin:v:139:y:2023:i:c:s0261560623001511
    DOI: 10.1016/j.jimonfin.2023.102950
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    More about this item

    Keywords

    Discouraged bank borrowers; Textual analysis; Speeches tone; Central banks; Eurozone SMEs;
    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
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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