When Green Meets Green

60 Pages Posted: 7 Jan 2021 Last revised: 15 Mar 2022

See all articles by Hans Degryse

Hans Degryse

KU Leuven - Faculty of Business and Economics (FEB)

Roman Goncharenko

KU Leuven - Department of Accountancy, Finance and Insurance (AFI)

Carola Theunisz

KU Leuven

Tamas Vadasz

KU Leuven - Faculty of Economics and Business

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Date Written: March 15, 2022

Abstract

We investigate whether and how the environmental consciousness (greenness for short) of firms and banks is reflected in the pricing of bank credit. Using a large international sample of syndicated loans over the period 2011-2019, we find that green banks indeed reward firms for being green in the form of cheaper loans--however, only after the ratification of the Paris Agreement in 2015. Thus, we find that environmental attitudes matter "when green meets green.'' We further construct a stylized theoretical model to show that the green-meets-green pattern emerges in equilibrium as the result of third-degree price discrimination with regard to firms' greenness.

Keywords: Paris Agreement, Green Firms, Green Banks, Bank Lending

JEL Classification: A13, G21, Q51, Q58

Suggested Citation

Degryse, Hans and Goncharenko, Roman and Theunisz, Carola and Vadasz, Tamas, When Green Meets Green (March 15, 2022). Available at SSRN: https://ssrn.com/abstract=3724237 or http://dx.doi.org/10.2139/ssrn.3724237

Hans Degryse

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Roman Goncharenko (Contact Author)

KU Leuven - Department of Accountancy, Finance and Insurance (AFI) ( email )

Naamsestraat 69
Box 3525
Leuven, 3000
Belgium

HOME PAGE: http://sites.google.com/view/roman-goncharenko

Carola Theunisz

KU Leuven ( email )

Naamsestraat 69
Leuven, Vlaams-Brabant 3000
Belgium

Tamas Vadasz

KU Leuven - Faculty of Economics and Business ( email )

Korte Nieuwstraat 33
2000 Antwerpen
Belgium

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