Credit Supply and Green Investments

67 Pages Posted: 25 Sep 2022

See all articles by Antonio Accetturo

Antonio Accetturo

Bank of Italy

Giorgia Barboni

University of Warwick - Finance Group

Michele Cascarano

Bank of Italy

Emilia Garcia-Appendini

University of Zurich - Department of Banking and Finance

Marco Tomasi

University of Trento

Date Written: September 13, 2022

Abstract

Does an increase in credit supply affect firms' likelihood to invest in green technologies? To answer this question, we use text algorithms to extract information on green investments from the comments to the financial statements of Italian SMEs between 2015 and 2019. To identify the effect of credit supply, we use all loans disbursed by banks operating in Italy to construct a firm-specific time-varying instrument for credit availability. We find a large positive elasticity of green investments to credit supply. The effect is concentrated among firms with high availability of internal capital and in areas with higher preferences for environmental protection. Subsidies and market competition can spur green investments if combined with environmental awareness.

Keywords: Credit supply, CO2 emissions, green investments, climate finance, bank credit.

JEL Classification: G32, Q54, Q55

Suggested Citation

Accetturo, Antonio and Barboni, Giorgia and Cascarano, Michele and Garcia-Appendini, Emilia and Tomasi, Marco, Credit Supply and Green Investments (September 13, 2022). Available at SSRN: https://ssrn.com/abstract=4217890 or http://dx.doi.org/10.2139/ssrn.4217890

Antonio Accetturo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giorgia Barboni

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

Michele Cascarano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Emilia Garcia-Appendini (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Marco Tomasi

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

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