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Individual credit market experience and beliefs about bank lending policy: evidence from a firm survey

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  • Jarko Fidrmuc
  • Christa Hainz
  • Werner Hölzl

Abstract

Using the Austrian Business Survey between 2011 and 2016, we study how firms' individual credit market experiences influence their beliefs about the bank lending policy. Firms that have recently experienced a loan rejection are more likely to believe that the lending policy is restrictive. We see similar effects for firms that 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, 2024. "Individual credit market experience and beliefs about bank lending policy: evidence from a firm survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 126(2), pages 387-414, April.
  • Handle: RePEc:bla:scandj:v:126:y:2024:i:2:p:387-414
    DOI: 10.1111/sjoe.12548
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