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Experience and Firms’ Financing Behavior: A Behavioral Perspective

Author

Listed:
  • Fidrmuc Jarko

    (Zeppelin University of Friedrichshafen, CESifo, Friedrichshafen, Germany)

  • Horky Florian

    (Mendel University Brno, Brno, Czech Republic)

Abstract

Using multinomial logit methodology for financing application decisions for bank loans, credit lines and trade credits, we show that firms’ financial behavior is driven by their lagged experience. Moreover, the optimism and pessimism of firms (animal spirit) is another important determinant. Our results stress the importance of the behavioral perspective to corporate finance. The policy of quantitative easing of the ECB had only weak effects on the access to banking loans, while it was significantly correlated with lower internal funding. Our results have possible implications to understand the behavioral dynamics of corporate financing structure the in the post pandemic period.

Suggested Citation

  • Fidrmuc Jarko & Horky Florian, 2023. "Experience and Firms’ Financing Behavior: A Behavioral Perspective," German Economic Review, De Gruyter, vol. 24(3), pages 233-269, August.
    • Handle: RePEc:bpj:germec:v:24:y:2023:i:3:p:233-269:n:2
    DOI: 10.1515/ger-2022-0102
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    More about this item

    Keywords

    behavioral macroeconomics; financing behavior; loss aversion; pessimism bias;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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