Global Banks' Macroeconomic Expectations and Credit Supply

Xiang Li and Steven Ongena
Additional contact information
Xiang Li: Halle Institute for Economic Research; Leipzig University
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

No 26-33, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We examine how global banks’ macroeconomic expectations shape credit supply. Exploiting granular within-firm variation in lender beliefs—by comparing multiple banks lending concurrently to the same firm—alongside an instrumental variable strategy, we document that optimistic GDP growth expectations causally drive credit expansion. Quantitatively, a one-standard-deviation increase in a lender’s GDP forecast expands its loan share by over 8 percentage points (0.75 standard deviations), generating $75 million in additional lending. Conversely, global banks' inflation expectations only impact credit supply during recent high-inflation regimes. Finally, we show that elevated growth expectations induce a distinct reallocation of credit toward riskier borrowing firms.

Keywords: Expectation; Asymmetric Information; Global Banks; Credit Supply (search for similar items in EconPapers)
JEL-codes: E32 F34 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2026-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5287373 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2633

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().