New WIFO Working Paper

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.