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

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

Journal of International Money and Finance, 2023, vol. 139, issue C

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.

Keywords: Discouraged bank borrowers; Textual analysis; Speeches tone; Central banks; Eurozone SMEs (search for similar items in EconPapers)
JEL-codes: C25 E58 G10 G30 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:139:y:2023:i:c:s0261560623001511

DOI: 10.1016/j.jimonfin.2023.102950

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