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Too sunny to borrow: Sunshine and borrower discouragement

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  • Bertrand, Jérémie
  • Weill, Laurent

Abstract

We test the hypothesis that sunshine affects the discouragement of borrowing firms. Using a sample of approximately 45,000 firms from 124 countries for the period 2010–2020, we find that higher sunshine is associated with a greater probability of being discouraged for the borrowing firm. Furthermore, we establish that the discouraging impact of sunshine on the decision to apply for a loan is only observed in low latitude zones. We explain these findings by arguing that more sunshine creates a negative mood in hot regions. Additional results suggest that managerial features affect the discouraging impact of sunshine.

Suggested Citation

  • Bertrand, Jérémie & Weill, Laurent, 2023. "Too sunny to borrow: Sunshine and borrower discouragement," Research in International Business and Finance, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923001149
    DOI: 10.1016/j.ribaf.2023.101988
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    More about this item

    Keywords

    Access to credit; Borrower discouragement; Sunshine; Developing countries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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