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Summary: During the COVID-19 crisis, the European corporate ecosystem avoided major disruptions, and corporate bankruptcy rates even declined. This outcome mostly resulted from the strength of support from monetary, financial supervisory and fiscal policies. Using the 2021 vintage of the EIB Investment Survey (EIBIS) matched with balance sheet data on firms' profits and losses, this paper investigates what has driven the allocation of fiscal policy support and the impact of this support during the investment recovery. It finds that support was largely directed towards firms that were most affected by the crisis in terms of lost sales, and was not tilted firms already weak before the crisis. It also shows that the firms that benefitted from this support tend to be more optimistic in their investment plans, especially with regard to digital technologies.

The use of advanced digital technologies such as 3D printing, advanced robotics, drones, big data analytics and artificial intelligence is spreading. These technologies have uncertain implications for labour demand. Affected workers may need to re-train to adapt to changing tasks or new jobs. At the same time, it is unclear whether or not advanced digital technologies encourage firms to invest in workforce re-training. Using firm-level data covering the 27 EU countries, the UK and the US, this paper shows that employers tend to reduce investment in training per employee, after adopting advanced digital technologies. It estimates, with a control function approach, firm-level production functions augmented with two factors: training per employee and digital technology use. We show that these are in fact substitutes in production, implying that an increase in the former negatively affects the marginal productivity of the latter, and that a decline in the cost of introducing advanced digital technologies reduces employers’ investment in training per employee. These findings point to challenges in realising high levels of firm-sponsored training for employees in increasingly digital economies.

The use of advanced digital technologies such as 3D printing, advanced robotics, drones, big data analytics and artificial intelligence is spreading. These technologies have uncertain implications for labour demand. Affected workers may need to re-train to adapt to changing tasks or new jobs. At the same time, it is unclear whether or not advanced digital technologies encourage firms to invest in workforce re-training. Using firm-level data covering the 27 EU countries, the UK and the US, this paper shows that employers tend to reduce investment in training per employee, after adopting advanced digital technologies. It estimates, with a control function approach, firm-level production functions augmented with two factors: training per employee and digital technology use. We show that these are in fact substitutes in production, implying that an increase in the former negatively affects the marginal productivity of the latter, and that a decline in the cost of introducing advanced digital technologies reduces employers’ investment in training per employee. These findings point to challenges in realising high levels of firm-sponsored training for employees in increasingly digital economies.

"The availability of talent and skills has been a significant investment obstacle for firms across the EU over the years, with several sources highlighting the persistence and prevalence of skill shortages. In this paper, we use the European Investment Bank’s Investment Survey (EIBIS) for the empirical analysis, which allows tracking corporate training investment on a yearly basis. To understand the reasons for firms’ decision to invest in their workforce, we examine transition patterns and employ dynamic panel data estimation. We also analyse the impact of COVID-19 on firms’ investment in workforce training and transitions in and out of training. Despite a slow upward trend in training investment observed in recent years supported by labour market recovery, differences across firms and countries have persisted. The pandemic risks aggravating these differences, through its uneven impact on labour markets and differences in corporate innovation, firm structure and resilience. While firm training can be an important element for firms and their workforce to adjust to the post-pandemic environment, asymmetries in training investment could make it harder for those already lagging. The paper concludes with a discussion of policy implications."

"Public debt levels are a very weak predictor of a country’s credit rating if a country’s other features are not taken into account. However, everything else equal, more public debt is associated with worse ratings. This paper explores the relationship between debt and sovereign creditworthiness through the debt thresholds associated with rating changes. It finds that the impact of an increase in public debt is non-linear and crucially depends on a country’s economic situation. Low levels of gross domestic product per capita are associated with a smaller range of possible ratings than higher levels. In countries with a higher gross domestic product per capita, a change in debt levels is thus more likely to result in a rating change. Overall, the non-linear relationship between debt and creditworthiness is substantial, and accounting for it improves the performance of sovereign credit rating models significantly."

"Many countries in Sub-Saharan Africa have liberalised their foreign exchange markets and capital accounts, and have moved to more flexible exchange rates, in recent decades. In this context, the interaction between non-resident investors and export structures centred on primary commodities create a risk of destabilising exchange rate dynamics and further complications for macroeconomic management. This paper presents detailed insights into the micro-characteristics of several African Lower and Lower-Middle Income Countries' foreign exchange markets and the implications of these characteristics for macroeconomic management. It draws on interviews with foreign exchange experts in central banks, banks, non-bank financial institutions, and research institutions in Ghana, Kenya, Malawi, Sierra Leone, Uganda, and Zambia, as well as the City of London. The results show that whilst most of these countries have functioning foreign exchange interbank markets, these markets are often characterised by low, volatile and “lumpy” liquidity. These liquidity dynamics and uncertainty about future foreign exchange flows can lead to foreign exchange hoarding by market participants, further depriving the market of liquidity. Those with access to foreign exchange liquidity can gain significant market power and the potential to affect price dynamics, which has meant that central banks in these countries have remained key agents in foreign exchange markets, to manage scarce and volatile liquidity patterns. Overall, the results show the difficulties of moving towards floating exchange rates, for African countries characterised by concentrated export structures, low trust in their currencies, and shallow domestic financial markets."

During the COVID-19 crisis, the European corporate ecosystem avoided major disruptions, and corporate bankruptcy rates even declined. This outcome mostly resulted from the strength of support from monetary, financial supervisory and fiscal policies. Using the 2021 vintage of the EIB Investment Survey (EIBIS) matched with balance sheet data on firms' profits and losses, this paper investigates what has driven the allocation of fiscal policy support and the impact of this support during the investment recovery. It finds that support was largely directed towards firms that were most affected by the crisis in terms of lost sales, and was not tilted firms already weak before the crisis. It also shows that the firms that benefitted from this support tend to be more optimistic in their investment plans, especially with regard to digital technologies.

When firms suffer losses from extreme weather events, such as storms, foods, droughts or landslides, it has implications for their investment plans and the finance their need. This paper investigates the investment and financing decisions of firms that experience monetary losses due to such extreme weather events. It looks at firms in 41 economies, mainly emerging and developing markets, using data from the EBRD-EIB-World Bank Enterprise Survey. It finds that firms hit by extreme weather are more likely to invest in long-term assets, in a way that fits with the need to either replenish damaged capital or to adapt to climate change. In addition, they are more likely to integrate climate-friendly measures in their production processes. Although these firms have higher needs for bank credit, they are not more likely to be credit constrained than the average firm. Nonetheless, they face higher loan rejection rates and have, on average, more debt than otherwise comparable firms. This suggests that climate change has the potential to erode the quality of firm balance sheets over time.

"The last three decades have witnessed substantial changes in the foreign exchange markets in Africa, with moves towards liberalisation and flexible exchange rate regimes. This has increased the influence of financial market conditions and heightened the risk of exchange rate volatility and large and sudden exchange rate movements. This paper investigates the determinants of nominal exchange rates, their volatility, and crash risk in African lower and lower-middle income countries. It combines macro-panel estimations for 15 such countries with insights from interviews with market participants. It shows the importance of these countries' distinctive export structure, concentrated in a few agricultural and mineral-based commodities, as well as recent financial integration, for exchange rate determination. It finds that terms of trade, export concentration, and export prices have a significant impact on the exchange rate level and volatility. By contrast, financial factors including the interest rate differential, international market conditions, and short-term financial flows, influence the likelihood of sudden and large exchange rate movements."

"The sudden onset of the COVID shock has left European economies reeling, resulting in a sudden contraction of demand that has hit some vulnerable firms and sectors in a remarkably uneven way. There is a genuine interest from policymakers to learn about which types of firms have been left in vulnerable circumstances as a result of the crisis. In this paper, we present new evidence on the evolution of investment plans of certain groups of firms suspected of being vulnerable -young and small firms, High-Growth Enterprises (HGEs) and R&D investors. We applied a difference-in-differences approach on panel data regarding forward-looking investment expectations. The results show that all the vulnerable groups are pessimistic about the availability of internal and external finance, with HGEs suddenly expecting less of a positive change in investment, and R&D investors expecting a negative change in investment."

"This sovereign default risk index is a high frequency measure of countries’ default risk, particularly for those lacking market-based measures: it correlates with sovereign credit default swap spreads, predicts rating downgrades, and reflects default risk information not fully captured these spreads. We assess the influence of sovereign default concerns on equity markets, and find that spikes in the index are negatively associated with same-week market returns. This indicates that investors might overreact to default concerns. Equity markets’ reaction to default concerns is more pronounced and persistent for countries with tight fiscal constraints. The response to global, compared to country-specific, default concerns is much stronger, underlining the relevance of global “push” factors for local asset prices."

"The COVID-19 pandemic and its effects affected sectors in different ways, including on the firm-level productivity. Findings show that firms’ responses to the COVID-19 crisis varied within sectors: more productive firms coped with the crisis better in terms of closures and employment adjustments. They were also more likely to speed up some digitalisation processes. These findings imply that the recent crisis could amplify the difference between highly productive and less productive firms. When it comes to the governments’ policy measures, we find strong usage at the firm level, but very little differentiation across productivity quantiles, suggesting room for a more targeted approach for the reminder of the pandemic."

"This study uses unique firm-level data from EIBIS to identify EU firms' climate strategies and the firm characteristics associated with them. Through a clustering analysis, the these strategies are divided into five distinct clusters, in line with the correspondent literature. We then investigate the role of various firms' characteristics in their adoption based on a multi-logit regression. The findings show that almost half of the EU firms either adopt ""wait-and-see"" strategies or plan to invest in tackling climate change risks. More climate-friendly strategies appear to be positively associated with awareness of climate-related risks, especially with firms that see the transition to a low-carbon future as an opportunity. Similarly, those strategies are followed by large firms that are innovative, face fewer credit constraints and operate in an environment where there is a strong push for climate action from various stakeholders. These findings can guide policymakers on supporting firms' transformation to play their part, as an integral part of our society, in the road to a clean, affordable, and secure energy future."

When they consider investing in energy efficiency measures many firms focus only on direct energy savings and do not consider non-energy benefits that include increased labour productivity. To date, due to lack of high-quality data, few studies have attempted to quantify the effects of energy efficiency investments on firm-level outcomes other than reductions in energy consumption. This paper overcomes this barrier by using novel data from the EIB Investment survey of firms in the EU and the United Kingdom for the years 2018-2019. It studies the relationship between the energy efficiency investment and the labour productivity of European firms, utilising an instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investment and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms' awareness of these non-energy benefits.

Using EIBIS data, this paper investigates the effects of different loan conditions on firms’ propensity to invest in intangible assets. When firms face restriction in how much they can borrow, this has a strong effect on how much they invest in intangible assets. Using European firm-level data from the EIB Investment Survey, this paper shows that, by contrast, unfavourable interest rates, maturity and collateral requirements have no significant effects on the probability to invest in intangible assets, provided firms are satisfied with their loan size. These terms however, do have a negative impact on the probability to invest in multiple intangible assets, undermining the ability of firms to benefit from the complementarities of these assets. The paper documents the effect of loan conditions on investment intensity, as well. The effect of quantity rationing on the amount invested in intangible assets is found to be limited. Other loan conditions however, like cost, maturity and collateral requirements, have significant effect on investment intensity.

Using firm balance sheet data, this paper shows the impact of credit constraints on allocative efficiency and productivity growth. Allocative efficiency is the extent to which resources, including labour, are distributed to firms with the highest growth prospects, or “stuck” in less productive firms. This paper uses firm balance sheet data to analyse the role of financial constraints in the relatively muted post-crisis rebound in productivity in 2014-17, compared to previous upturns in Europe. It shows that the level of financial leverage played an important role in explaining the change in aggregate productivity growth in Europe between 2004 and 2017. Focusing on Northern and Western Europe, it also shows that the productivity potential could not be fully exploited due to constraints on access to credit. It estimates that reducing collateral bottlenecks could more than double the effectiveness of financial leverage in spurring productivity growth in this region between 2014-17.

In this paper we assess the merits of financial condition indices constructed using simple averages versus a more sophisticated alternative that uses factor models with time varying parameters. Our analysis is based on data for 18 advanced and emerging economies at a monthly frequency covering about 70% of the world’s GDP. We assess the performance of these indicators based on their ability to capture tail risk for economic activity and to predict banking and currency crises. We find that averaging across the indicators of interest, using judgmental but intuitive weights, produces financial condition indices that are not inferior to, and actually perform better than, those constructed with more sophisticated statistical methods.

High-Growth Enterprises have a large economic impact, but it is notoriously hard to predict when firms will experience episodes of high growth. This paper proposes that firms reaching critically high capacity utilisation levels reach a ‘trigger point’ involving either broad-based investment in further growth, or shrinking back to previous levels. It analyses EIBIS survey data (matched to the ORBIS database) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements, and modern machinery) rather than investing in R&D and new product development. The analysis finds support for the ‘fork in the road’ hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth.

Using macro and firm-level data, this paper investigates the complementarities between investment in different types of tangible assets such as machinery and buildings, and intangible assets such as software, training of employees, and business process improvements. It finds that investment in different assets types tends to be complementary, improving firm performance. Policy measures should address investment bottlenecks arising from market imperfections, while leaving it to the firm to find the most appropriate mix of assets.

Internationalisation and the adoption of new digital technologies play an important role in the formation of new high growth enterprises. This paper examines this relationship for high growth enterprises in Europe and the UK, using data from the EIB Investment Survey and ORBIS. Its results highlight the complex influence of exporting and foreign direct investment on the capacity to become a high growth enterprise and the role of new digital technologies in this process.

The factors behind the pre-crisis growth model of the Central, Eastern and South-Eastern European EU countries (CESEE) region – skilled yet affordable labour force, foreign direct investment, imports of productivity-enhancing technology – are having less effect, but are yet to be substituted. This paper proposes a new growth model centred around a shift towards more home-grown innovation, digitalisation, climate change mitigation and a strong focus on skills, labour and social inclusion, to leave the middle-income trap behind for good and to boost economies’ growth prospects in a post-COVID world. Based on analysis of firm-level data, it highlights the prerequisites of making this transition happen.

The EIB Climate Change Risk Country Scoring Model provides a way to comprehensively assess the climate change risks faced by more than 180 countries. The two sets of scores for physical and transition risks aggregate exposures to various risk factors, taking into account the adaptation and mitigation capacity of each country. The scores confirm that climate risk is a relevant challenge for all countries. However, low-income economies are more vulnerable to physical risk — in particular to acute events, rising sea levels and excessive heat — and in parallel have lower ability to mitigate the challenges posed by the energy transition. High-income economies generally face higher risks from the transition to a low-carbon future. Countries more dependent on fossil fuel revenues are also among the most exposed to transition risk. This paper provides insights into the model as it is currently being developed. Understanding the relative climate risks faced by countries support the management of climate risks at the country level, as well as helping to understand the environmental and policy conditions faced by firms in each country. It can also help to identify mitigation and adaptation priorities and related financing needs. Taken together, a better understanding of the risks and the consequent adaptation and mitigation needs will help to ensure that opportunities to enhance climate resilience are not missed.

Using a representative sample of European firms, this paper studies whether and to what extent financing constraints affect employers’ decisions to invest in employee training. It combines survey data on investment activities with administrative data on financial statements to develop an index of financing constraints. It estimates that a 10 percent increase in this index reduces investment in training as a share of fixed assets by 2.9 to 4.5 percent and investment in training per employee by 1.8 to 2.5 percent. The paper documents that lower investment in training reduces productivity, and show that firms facing tighter financing constraints cut back the investment in training and tangible assets less than investment in R&D and software and data.

We utilize several unique firm-level datasets in order to assess the efficiency and effectiveness of the government support aiming to curb the economic consequences of the coronavirus (COVID- 19) pandemic. The results, drawing on the experience of a small open European country (Slovakia), suggest the distributed COVID-19 subsidies save non-negligible number of jobs and sustain economic activity during the first wave of the pandemic. General distribution rules designed on the fly may bring close to optimal results, as relatively more productive, privately owned, foreign-demand oriented firms are prioritized and firms with a higher environmental footprint or zombie firms record a relatively lower chance of obtaining government funding. By assuming constant cost elasticities to sales, we show that the pandemic deteriorates strongly firm profits and increases significantly the share of illiquid and insolvent firms. Government wage subsidies somewhat mitigate firm losses and have statistically significant effect, but relatively mild compared to the size of the economic shock. Our estimates also confirm that larger firms, receiving smaller relative size of the support, have more space to cover their additional liquidity needs by increasing trade liabilities or liabilities to affiliated entities, while SMEs face higher risk of insolvencies.

We estimate a FAVAR with Bayesian techniques in order to investigate the impact of loan supply conditions on euro area corporate investment and its financing structure. We identify shocks to overall demand and loan supply with sign and impact restrictions. Although tightened financial conditions have adversely impacted corporate investment during and after the sovereign debt crisis, the resulting impediments in loan supply, illustrated by lower loan volumes and higher spreads, have been partly alleviated by strengthened corporate debt issuance. We show that (1) part of the protracted increase in debt to loan ratio since the crisis reflects bottlenecks in the provision of bank credit and (2) the tightened loan supply has been more adverse for small corporations with limited market access. Overall, our analysis of macro-financial developments suggests the need for policy actions to deepen the European corporate debt market and enhance market access for smaller corporates.

Egyptian firms face significant access to finance constraints. Using panel data, this paper examines the reasons why many Egyptian firms do not use formal banking services. Using data on the location of firms and bank branches, it also investigates whether access to finance constraints are linked to the crowding-out effect of bank investments in government debt.

The impact of foreign direct investment (FDI) on economic growth is affected by incomes levels and the quality of the institutional environment. This paper examines these relationships based on data for 111 countries, stretching back to 1980. It finds that FDI benefits do not accrue mechanically and evenly across countries. Instead, there is inverted-U shaped relationship between countries’ income levels and the size of FDI’s impact on growth. Moving from low to middle-income countries the effect gets larger. On the other hand, it diminishes again transitioning to high income countries. It also finds that absorptive capacity matters in channelling FDI effects. Within country income groups, countries with better-developed institutions relative to their peers benefit more from FDI in terms of growth.

This paper estimates the revenues lost by European firms during the COVID-19 crisis, taking into account different scenarios regarding policy support and the length of the crisis. It examines the likely effect of such revenue losses on firms’ internal financing capacity and on investment, suggesting that the COVID-19 crisis may trigger an fall in corporate investment greater that that experienced during the Great Financial Crisis, with firms facing a trade-off between reduced investment and greater indebtedness. A macro-model based on historical data also suggests that the decline in corporate investment would likely be within the computed ranges, should the estimated gap in firm revenues materialise as the result of the crisis.

This report looks at employer–provided training in Europe. Starting with a brief outline of the economic theory of training, it turns to recent developments by combining data from two employer surveys, the European Investment Bank’s Investment Survey (EIBIS) and Eurostat’s Continuous Vocational Training Survey (CVTS). It reviews the recent empirical literature on the relationship between economic institutions and training and between training and productivity and considers whether financing constraints hamper the provision of training by firms. The paper concludes by discussing policy implications.

Providing a technical analysis of the data quality of the EIB Investment Survey (EIBIS), this paper finds that the chosen sampling framework captures the business population of interest well and that there is little evidence of selection bias during fieldwork. This suggests that EIBIS is a reliable data source to study the corporate investment situation in the EU.

This paper investigates the impact of intermediated funding provided by the EIB on the performance of SMEs in the EU between 2008 and 2014. Using statistical analysis of firm-level data, it finds that EIB lending had a positive effect on employment, firm size, investment and innovation capacity, and also increased firms' leverage. The impact of EIB funding was higher in the countries of Central and Eastern Europe and also in Southern Europe, while somewhat smaller, yet still significant, in West and North Europe.

Macro-based asset allocation is based on the identification of turning points in macro-financial cycles. This paper suggests that macro-based asset allocation informed by trends in continuous business and financial cycle indicators could be a promising alternative for medium- and long-term investment strategies. Despite changes during the last three decades, the most promising specifications of this approach did roughly anticipate turning points in asset price cycles, implying favourable returns and low portfolio volatility.

As the productivity of the European economy shows signs of slowing down, many hopes are pinned on digital technologies to reverse this trend. This study uses data from the EIBIS 2019 survey to examine whether the adoption of different digital technologies (such as advanced robotics, 3D printing, or Internet of Things) by firms in the EU have different impacts on productivity. It also examines whether these different technologies have different implications for employment growth, and whether there are complementarities between technologies when it comes to firm performance.

Using the EIBIS Digital and Skills Survey on digitalisation activities of firms in the EU and the US, this study confirms the trend toward a growing digital divide in the corporate landscape with, on one side, many firms that are not digitally active, and on the other side, a substantial number of digitally active firms forging ahead. Old small firms, with less than 50 employees and more than 10 years old, are significantly more likely to be persistently digitally non-active. We show that these persistently non-digital firms are less likely to be innovative, increase employment or command higher mark-ups. These trends are likely to exacerbate the digital divide across firms in the EU and the US.

Financial instruments and technical assistance are effective in increasing investments in energy efficiency. When these favourable conditions are combined, the probability that firms invest in energy efficiency increases by more than a third. These results provide important insights into measures to increase energy efficiency investments, and how to optimally design them, which is key for EU policy-makers and lending institutions.

In Romania, the share of firms carrying out investment is amongst the lowest in the European Union. This is despite strong economic growth in recent years and persistent needs for upgrading the capital stock in the country. This paper draws on information from two surveys – the EIB Investment Survey and a survey on access to finance conducted by the National Bank of Romania – to analyse the reasons for this subdued corporate investment activity. It also contributes to the debate on why investment in central, eastern and south eastern Europe has remained relatively subdued after the crisis.

Energy audits play an important role in promoting energy-efficiency measures in SMEs. This paper uses EIB Investment Survey data about energy audits and energy-efficiency investments of some 12,500 signatures from EU28 Member States per year. It suggests that: Energy audits are a useful tool for overcoming the information barriers and facilitating investments in energy-efficiency measures They are more important for small firms and for investments in things such as such as lighting, wall insulation etc. than in production processes such as the replacement of machinery and equipment The beneficial impact of energy audits ceases to exist, however, when firms are finance constrained Information campaigns are one of the most efficient available instruments among other instruments (regulatory, financial and voluntary agreements) for promoting energy audits in SMEs.

IFIs provide funding for SMEs, but what impact does this actually have on these firms? This working paper assesses the impact of funding by the EIB on the performance of more than 5,000 SMEs in eight countries in Central and Eastern Europe during 2008-2014. Using propensity score matching and difference-in-difference estimation exercises, it indicates that EIB lending has had a positive effect on employment, revenues and profitability. This holds whether or not the economy is in a period of crisis or recovery.

Labour markets are undergoing structural transformation due to globalisation, demographic trends, advancing digital technologies and automation and changes in labour market institutions. Against this background, businesses increasingly report that the limited availability of skills poses an impediment to corporate investment. Genuine skill constraints can negatively affect labour productivity and hamper the ability to innovate and adopt technological developments. For individual Europeans, not having “the right skills” limits employability prospects and access to quality jobs. For Europe at large, persistent skill gaps and mismatches come at economic and social costs. This paper reviews the recent economic literature on skill mismatch and skill shortages, with a focus on Europe. It questions: how the job requirements of individuals can be measured; whether skill shortages stated by employers reflect the lack of suitable candidates or are due instead to the wage and working conditions being offered; what economic costs are posed by skill mismatch and shortages; and how policy can address the issue of skills, including the role of EU policies.

This paper provides an introduction to financial technology and blockchain, while exploring: the impact of FinTechs and TechFins on the financial sector, a description of blockchain technology and its applications, with a focus on cryptocurrencies, the impact on financial inclusion, risks and challenges, applications for international financial institutions and their clients.

Energy audits are key to increase investments in energy efficiency This paper assesses the effectiveness of policy interventions in promoting energy audits by relying on evidence from a unique experiment. The findings of the experiment allow us to quantify by how much the probability that firms invest in energy audits increases, as the policy mix changes.

Firms can be identified as high growth, stable or declining. This paper investigates the links between these different phases in the life of a firm, investment activity, financing needs and financing constraints. Using the representative EIBIS survey of EU companies, it finds that firms in a high growth phase are more likely to apply for equity financing and more likely to be financially constrained. Further, it identifies firms with a high growth potential. The most severe barriers for high-growth enterprises are the availability of skilled staff and business regulations, while potential high-growth enterprises are more constrained by uncertainty about the future.

Information from surveys can be used alongside macroeconomic indicators to provide a better understanding of the obstacles to investment faced by firms. This study uses merged firm level data from the European Investment Bank Investment Survey (EIBIS) and hard data from firms’ balance sheets and profit and loss information to investigate how well survey results correlate with macro-based hard data. Firms’ perceptions of impediments to investment tend to be related to firms’ specific characteristics: firms that are smaller, more indebted, less profitable or with less liquidity, tend to report more impediments. Nonetheless, after controlling for firm specific characteristics, the investment gaps reported by firms remain correlated with the reported impediments.

We use the association between non-financial firms and their banks, an information available in the European Investment Bank Investment Survey (EIBIS), to disentangle the effects of borrowers’ and lenders’ financial weakness on the satisfaction with the loan contracted. The dataset matches survey data of non-financial firms about their satisfaction with bank lending with their financial data and the financial data of their banks. We find evidence of both demand and supply factors determining firm satisfaction with bank loan financing: non-financial firms with weaker finances and those financed by weaker banks are less satisfied with their bank financing. We also find that the impact of supply factors differs across regions within the EU: the effect of bank’s financial weakness on borrower satisfaction is not significant in core countries but is in periphery countries.