Carbon Emissions and the Bank-Lending Channel

59 Pages Posted: 3 Sep 2021 Last revised: 19 Aug 2022

See all articles by Marcin T. Kacperczyk

Marcin T. Kacperczyk

Imperial College London - Accounting, Finance, and Macroeconomics; Centre for Economic Policy Research (CEPR)

José-Luis Peydró

Imperial College London; Centre for Economic Policy Research (CEPR); Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: August 18, 2022

Abstract

We study how firm-level carbon emissions affect bank lending and, through this channel, real outcomes in a sample of global firms with syndicated loans. We use bank-level commitments to decarbonization to proxy for changes in banks’ green preferences and, via these commitments, shocks to firms with previous credit from these banks. Firms with higher carbon footprint previously borrowing from committed banks subsequently receive less bank credit. Affected firms also lower their total debt, leverage, size, and real investments, and increase their liquid assets. We find no improvement in environmental performance of brown firms, but only evidence consistent with firms’ greenwashing.

Keywords: carbon emissions, bank lending, cost of debt, real effects, environmental performance

JEL Classification: G12, G23, G30, D62

Suggested Citation

Kacperczyk, Marcin T. and Peydro, Jose-Luis, Carbon Emissions and the Bank-Lending Channel (August 18, 2022). Available at SSRN: https://ssrn.com/abstract=3915486 or http://dx.doi.org/10.2139/ssrn.3915486

Marcin T. Kacperczyk (Contact Author)

Imperial College London - Accounting, Finance, and Macroeconomics ( email )

South Kensington campus
London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jose-Luis Peydro

Imperial College London ( email )

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

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, Barcelona 08005
Spain
(+34) 93 542 1756 (Phone)
(+34) 93 542 1746 (Fax)

HOME PAGE: http://https://sites.google.com/site/joseluispeydroswebpage/

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