New WIFO Working Paper. WIFO industrial economist Werner Hölzl publishes WIFO Working Paper on Aggregate Bank Lending

Margit Schratzenstaller

10.01.2019

New WIFO Working Paper

WIFO industrial economist Werner Hölzl publishes WIFO Working Paper on Aggregate Bank Lending

Business surveys can provide timely information on bank lending. In this new working paper, WIFO industrial economist Werner Hölzl, Jarko Fidrmuc (Zeppelin University) and Christa Hainz (ifo Institute) show that firms' credit market experience determines their perception of aggregate bank lending policy using panel data from the Austrian Business Survey between 2011 and 2016.

In their study, WIFO industrial economist Werner Hölzl, Jarko Fidrmuc (Zeppelin University) and Christa Hainz (ifo Institute) find that loan rejections have a strongly negative and persistent effect on perceptions. Interestingly, firms that receive a loan at worse than anticipated conditions show a similarly negative effect. Firms that do not need a loan tend to perceive lending policy as neutral and revise their perceptions less often. The findings are in line with theories on sticky information, rational inattention and pessimism bias and suggest considering experience for the aggregation of perceptions.