What Makes Firms Dissatisfied with Their Bank Loans: New Evidence from Survey Data

We use loan-by-loan association between non-financial firms and their banks to disentangle the effects of financial weakness of borrowers and lenders on the satisfaction with the loan contracted. We construct indices measuring the financial weakness of borrowers and lenders. We find evidence of both demand and supply factors determining firm satisfaction with bank loan financing, especially regarding cost and collateral requirement. We also find that the impact of supply factors differs across regions within the EU: it is significant in periphery and cohesion countries but not in core countries where access to market is easier.