Author:
Silipo Damiano B.,Verga Giovanni,Hlebik Sviatlana
Abstract
Abstract
We use a large sample of US banks to construct a new indicator of managerial beliefs based on bank provisioning. This indicator does not only anticipate a future charge-off but also explains future loan growth and other variables. In particular, the indicator shows that an increase in managerial optimism (pessimism) leads to expanded (tight) lending, leverage, and a riskier (less risky) portfolio. Our findings confirm that widespread managerial optimism (pessimism) prevailed before (during) the 2007-2008 financial crisis and that changes in managerial beliefs played an important role in the lending and leverage cycles.
Funder
Università della Calabria
Publisher
Springer Science and Business Media LLC
Subject
Economics and Econometrics,Finance,Accounting