Credit Supply and Green Investments

74 Pages Posted: 25 Sep 2022 Last revised: 12 Feb 2024

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

Norges Bank; University of Zurich - Department Finance

Marco Tomasi

University of Trento

Date Written: February 12, 2024

Abstract

Does an increase in credit supply affect firms’ likelihood to invest in green technologies? Using text algorithms to extract information on the green investments of Italian firms between 2015 and 2019 and a firm-level instrument for credit availability, we find a large positive elasticity of green investments to credit supply. Consistent with a large capital intensity of green investments, this effect is concentrated among firms with ample internal resources. Subsidies and market competition, particularly if combined with environmental awareness, may enhance the impact of credit on green investments.

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 (February 12, 2024). 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)

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107
Norway

University of Zurich - Department 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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