Managerial and Financial Barriers to the Net-Zero Transition

47 Pages Posted: 19 May 2021 Last revised: 18 Nov 2021

See all articles by Ralph De Haas

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); KU Leuven

Ralf Martin

Imperial College London

Mirabelle Muûls

Imperial College Business School and Grantham Institute - Climate Change and the environment; London School of Economics - Centre for Economic Performance

Helena Schweiger

European Bank for Reconstruction and Development; European Bank for Reconstruction and Development (EBRD) - Office of the Chief Economist

Multiple version iconThere are 5 versions of this paper

Date Written: May 17, 2021

Abstract

We use data on 11,233 firms across 22 emerging markets to analyze how credit constraints and low-quality firm management inhibit corporate investment in green technologies. For identification we exploit quasi-exogenous variation in local credit conditions and in exposure to weather shocks. Our results suggest that both financial frictions and managerial constraints slow down firm investment in more energy efficient and less polluting technologies. Complementary analysis of data from the European Pollutant Release and Transfer Register (E-PRTR) corroborates some of this evidence by revealing that in areas where banks deleveraged more after the global financial crisis, industrial facilities reduced their carbon emissions by less. On aggregate this kept local emissions 15% above the level they would have been in the absence of financial frictions.

JEL Classification: D22, L23, G32, L20, Q52, Q53

Suggested Citation

De Haas, Ralph and Martin, Ralf and Muûls, Mirabelle and Schweiger, Helena and Schweiger, Helena, Managerial and Financial Barriers to the Net-Zero Transition (May 17, 2021). BOFIT Discussion Paper No. 6/2021, Available at SSRN: https://ssrn.com/abstract=3848393 or http://dx.doi.org/10.2139/ssrn.3848393

Ralph De Haas (Contact Author)

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

KU Leuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Ralf Martin

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Mirabelle Muûls

Imperial College Business School and Grantham Institute - Climate Change and the environment ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

London School of Economics - Centre for Economic Performance ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Helena Schweiger

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

European Bank for Reconstruction and Development (EBRD) - Office of the Chief Economist ( email )

One Exchange Square
London EC2A 2JN
United Kingdom

HOME PAGE: http://www.helenasch.net

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