Do banks fuel climate change?
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- Do_Banks_Fuel_Climate_Change_JFS_final_04_
Accepted author manuscript, 634 KB, PDF document
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DOI
Do climate-oriented regulatory policies affect the flow of credit towards polluting firms? We match loan-level data to firm-level greenhouse gas emissions to assess the impact of the Paris Agreement. We find that, following this agreement, European banks reallocated credit away from polluting firms in relative terms. Specifically, euro area banks’ loan share to more polluting firms decreased by about 3 percentage points compared to less polluting (or “green”) firms after the 2015 Paris Agreement (COP21). This result is stronger for banks that are well capitalized, have lower credit quality, and are less profitable.
| Original language | English |
|---|---|
| Article number | 101049 |
| Journal | Journal of Financial Stability |
| Volume | 62 |
| Early online date | 22 Jul 2022 |
| DOIs | |
| Publication status | Published - Oct 2022 |
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