Firms’ access to finance and the business cycle: evidence from the SAFE

Giada Durante, Annalisa Ferrando, Asger Munch Grønlund and Timo Reinelt

Economic Bulletin Boxes, 2023, vol. 8

Abstract: This box looks at the link between firms’ financing conditions and the euro area business cycle. For information on financing conditions of firms, the box uses results from the Survey on the Access to Finance of Enterprises (SAFE). Monetary policy is shown to affect changes in firms’ financing gaps – the difference between the change in demand for and the change in the availability of external financing – as well as their expectations about future availability of finance. At the current juncture, firms report increasing financing gaps and a deterioration in their expectations about the availability of finance in the period ahead. Such responses from firms are associated with stronger concerns about finance at the firm level. Moreover, financing conditions matter for the aggregate business cycle: increasing financing gaps and lower expected availability of finance foreshadow lower GDP growth. JEL Classification: D22, E32, E44, E52

Keywords: business cycles; Financing conditions; monetary policy transmission; survey data (search for similar items in EconPapers)
Date: 2023-01
Note: 235236
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2023:0008:5

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