Can Survey-Based Information Help Assess Investment Gaps in the EU?

Abstract

This study illustrates how information from micro-level and survey-based databases can be used, along with macroeconomic indicators, to provide a better understanding of corporate investment obstacles across the EU. To show this, we use a novel dataset merging firm-level data from the European Investment Bank Investment Survey (EIBIS) and hard data from corporations’ balance sheet and P&L information. We show that the indicators of impediments to investment at the country level, which can be derived from aggregating qualitative answers, correlate relatively well with macro-based hard data, which are commonly considered as determinants of investments in macro-based models. After controlling for firm-specific characteristics, the perceived investment gap (the difference between desired and actual investment) remains correlated with the reported impediments. While access to finance is not the most reported obstacle, reporting it has the highest information content. Moreover, the signal intensifies when it is given by “weaker” firms, defined as those that are smaller, and/or more indebted, and/or less profitable and/or with lower liquidity positions. From a policy standpoint, our findings suggest that survey-based information can be a useful input to complement both macro and micro hard data and better inform the design of targeted policies to support investment.