Heterogeneous expectations, forecast accuracy and firms’ credit demand

Gianluca Antonecchia

European Economic Review, 2023, vol. 154, issue C

Abstract: Firm heterogeneity in formulating expectations constitutes a source of friction for the credit market. An expected improvement of credit conditions in the future may slacken current credit demand. Using a panel of European firms in the period 2010–2019, I find that better expectations on future (six-month) access to credit reduce the probability of a firm to apply for bank loans by 3 percent. Results also suggest that access to credit expectations are adaptive. Although firms fail 43 percent of their access to credit forecasts, they adjust their expectations learning from previous forecast errors.

Keywords: Access to credit; Firms’ expectations; Forecast error; Survey data (search for similar items in EconPapers)
JEL-codes: D84 E41 G32 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:154:y:2023:i:c:s0014292123000594

DOI: 10.1016/j.euroecorev.2023.104430

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