Are firms' expectations on the availability of external finance rational, adaptive or regressive?
ISSN: 0144-3585
Article publication date: 28 June 2021
Issue publication date: 4 July 2022
Abstract
Purpose
This study investigates which expectation formation mechanism governs Eurozone firms regarding their expectations on external finance availability.
Design/methodology/approach
In this study, we link consecutive surveys from the Survey on the Access to Finance of Enterprises to bring new evidence on how non-financial corporations shape their expectations on external finance availability.
Findings
In line with the past literature, we demonstrate that the data reject the Rational Expectations hypothesis, and we find evidence in favor of the Adaptive Expectation mechanism.
Originality/value
This is the first study studying firms' expectations of external finance availability, implementing survey data of firms' expectations from the SAFE database on a country level. The formation of firm expectations is vital in directing policymakers in designing appropriate monetary policies, as both the employment and inflation targets of central banks around the world are highly dependent on the firm-level decision process.
Keywords
Acknowledgements
The authors thank the editor, M. Bahmani-Oskoee, and the two anonymous referees for their insightful comments and suggestions.
Funding: All the authors declare that no funding was received for this research.
Ethical approval: This article does not contain any studies with human participants performed by any of the authors.
Declaration of interests: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Disclaimer: The views and opinions expressed in this paper are those of the authors and do not reflect their respective institutions.
Conflict of interest: All the authors declare that they have no conflict of interest.
Citation
Anastasiou, D. and Giannoulakis, S. (2022), "Are firms' expectations on the availability of external finance rational, adaptive or regressive?", Journal of Economic Studies, Vol. 49 No. 5, pp. 833-849. https://doi.org/10.1108/JES-12-2020-0608
Publisher
:Emerald Publishing Limited
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