Experience and Firms' Financing Behavior: A Behavioral Perspective

Using multinomial logit methodology for financing application decisions for bank loans, credit lines and trade credits, we show that firms' financial behavior is driven by their lagged experience. Moreover, the optimism and pessimism of firms (animal spirit) is another important determinant. Our results stress the importance of the behavioral perspective to corporate finance. The policy of quantitative easing of the ECB had only weak effects on the access to banking loans, while it was significantly correlated with lower internal funding. Our results have possible implications to understand the behavioral dynamics of corporate financing structure the in the post pandemic period.