Global Banks’ Macroeconomic Expectations and Credit Supply

Paper is a joint work of Steven Ongena and Xiang Li.

Abstract

Xiang Li and Steven Ongena examine how global banks’ macroeconomic expectations shape credit supply. Exploiting granular within-firm variation in lender beliefs – by comparing multiple banks lending concurrently to the same firm – alongside an instrumental variable strategy, the authors document that optimistic GDP growth expectations causally drive credit expansion. Quantitatively, a one-standard-deviation increase in a lender’s GDP forecast expands its loan share by over 8 percentage points (0.75 standard deviations), generating $75 million in additional lending. Conversely, global banks’ inflation expectations only impact credit supply during recent high-inflation regimes. Finally, Li and Ongena show that elevated growth expectations induce a distinct reallocation of credit toward riskier borrowing firms.

About the speaker

Steven Ongena is Professor of Banking in the Department of Finance at the University of Zurich, a Senior Chair at the Swiss Finance Institute, a Research Professor at KU Leuven and at the NTNU Business School of the Norwegian University of Science and Technology, and a Research Fellow in Financial Economics at CEPR. Professor Ongena’s research has been published in leading academic journals in finance and economics. Together with Hans Degryse and Moshe Kim, he co-authored the graduate textbook Microeconometrics of Banking: Methods, Applications and Results, published by Oxford University Press. He has received numerous academic awards and serves as a research consultant to several central banks.

How to attend

To sign up for the seminar, please send an email to seminar@bsi.si. You can sign up by Thursday, 23 September 2026. The seminar will be held in English.