Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319911 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 8/2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We investigate how global banks' macroeconomic expectations for borrower countries influence their credit supply. Utilizing granular data on varying expectations among banks lending to the same firm at the same time, combined with an instrumental variable approach, we find that more optimistic GDP growth expectations for a borrower country are strongly linked to increased credit supply. Specifically, a one standard deviation increase in a lender's GDP growth expectation for the borrower's country corresponds to an increase of 8.46 percentage points in the loan share, equivalent to approximately 0.75 standard deviations of the loan share and $75.35 million in loan amount. In contrast, global banks' short-term inflation expectations do not show a significant impact on their credit supply.
Subjects: 
asymmetric information
credit supply
expectation
global banks
JEL: 
E32
F34
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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