Value-Driven Bankers and the Granting of Credit to Green Firms

79 Pages Posted: 25 May 2023 Last revised: 21 Nov 2023

See all articles by Di Bu

Di Bu

Macquarie University, Department of Applied Finance

Matti Keloharju

Aalto University School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Yin Liao

Macquarie University - Department of Applied Finance and Actuarial Studies; Australian National University - The Centre for Applied Macroeconomic Analysis (CAMA)

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Date Written: May 23, 2023

Abstract

How do bankers treat green firms? Utilizing unique loan application and banker preference data from a mid-sized bank, we find that customer managers, serving as front-line bankers, provide more favorable recommendations for green firms, particularly when they hold strong green values. However, a minority of environmentally skeptical bankers counteract this trend. These brown managers fake green interests when their recommendations bear no weight, and conversely, diminish their endorsements to green firms when they do hold significance. Additionally, brown loan officers, acting as superiors to these managers, strive to offset positive green firm evaluations by downgrading them.

Keywords: Green bank lending, customer managers, loan officers, values

JEL Classification: G21

Suggested Citation

Bu, Di and Keloharju, Matti and Liao, Yin and Ongena, Steven R. G., Value-Driven Bankers and the Granting of Credit to Green Firms (May 23, 2023). Swiss Finance Institute Research Paper No. 23-113, Available at SSRN: https://ssrn.com/abstract=4457192 or http://dx.doi.org/10.2139/ssrn.4457192

Di Bu

Macquarie University, Department of Applied Finance ( email )

North Ryde
Sydney, New South Wales 2109
Australia

Matti Keloharju (Contact Author)

Aalto University School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Yin Liao

Macquarie University - Department of Applied Finance and Actuarial Studies ( email )

Eastern Rd.
North Ryde
Sydney, NSW 2109
United States

Australian National University - The Centre for Applied Macroeconomic Analysis (CAMA) ( email )

Canberra, Australian Capital Territory 2601
Australia

Steven R. G. Ongena

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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