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Senior bank loan officers' expectations for loan demand: Evidence from the Euro-area

Anastasiou, Dimitrios (2020): Senior bank loan officers' expectations for loan demand: Evidence from the Euro-area.

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Abstract

We employ senior bank loan officers' responses regarding actual and expected loan demand from enterprises linking successive surveys in order to determine the dominant expectation formation mechanism that best describes European senior bank loan officers’ expectations. We utilize quarterly data for loan demand from enterprises from the European Bank Lending Survey for 14 Euro-area countries spanning the period 2003Q1 to 2019Q4. Our findings suggest that the adaptive expectations mechanism is compatible with senior bank loan officers' expectations for loan demand from enterprises. Our study contributes to the understanding of the formation of loan demand expectations and hence our findings can be very useful for monetary policy purposes.

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