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Borrower discouragement prevalence for Eurozone SMEs: Investigating the impact of economic sentiment

Dimitris Anastasiou (), Christos Kallandranis () and Konstantinos Drakos ()

Journal of Economic Behavior & Organization, 2022, vol. 194, issue C, 161-171

Abstract: We investigate whether economic sentiment exerts an impact on firms’ decision to apply for a bank loan or not and hence its impact on discouragement prevalence. Using survey data for Eurozone firms and employing a Probit Heckman selection model, we document that a positive shock in economic sentiment lowers the percentage of discouraged bank borrowers in the economy. In contrast, higher economic sentiment shock volatility leads to an increase in discouragement.

Keywords: Discouraged bank borrowers; Sentiment shock; Sentiment shock volatility; European SMEs; Heckman Selection; Uncertainty (search for similar items in EconPapers)
JEL-codes: C25 D81 D84 G10 G30 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.jebo.2021.12.022

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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