Loan Guarantee and Portfolio Greening: Evidence from European Credit Registers

46 Pages Posted: 14 Jul 2023 Last revised: 17 Dec 2024

See all articles by Bruno Buchetti

Bruno Buchetti

University of Padua - Department of Economics and Management ; European Central Bank (ECB)

Luca X. Lin

University at Buffalo (SUNY) - School of Management

Ixart Miquel-Flores

European Central Bank (ECB); Frankfurt School of Finance & Mangement.

Salvatore Perdichizzi

University of Padua - Department of Economics and Management

Alessio Reghezza

European Central Bank (ECB)

Multiple version iconThere are 3 versions of this paper

Date Written: June 11, 2023

Abstract

Using pan-European credit register data, we analyze the sharp increase in public guaranteed lending (PGL) during the COVID-19 loan guarantee programs and show that banks leverage PGL to expand lending to low-emission firms. This behavior is driven by industries less affected by COVID-19, banks with "browner" portfolios, and younger firms. Notably, compared to high-emission firms, banks' internal risk assessments in PGL to low-emission firms are less frequently updated and exhibit weaker predictive power for future credit quality deterioration, indicating lax monitoring efforts. These findings highlight the additional information production costs associated with green lending and shed light on why banks may be slow to transition to greener portfolios.

Keywords: Climate Change, Green Lending, Public-Guaranteed Loans, information production

JEL Classification: G20, G21, G28

Suggested Citation

Buchetti, Bruno and Lin, Luca Xianran and Miquel-Flores, Ixart and Perdichizzi, Salvatore and Reghezza, Alessio, Loan Guarantee and Portfolio Greening: Evidence from European Credit Registers (June 11, 2023). Available at SSRN: https://ssrn.com/abstract=4508502 or http://dx.doi.org/10.2139/ssrn.4508502

Bruno Buchetti

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Luca Xianran Lin

University at Buffalo (SUNY) - School of Management ( email )

255 Jacobs Management Center
Buffalo, NY 14260
United States

Ixart Miquel-Flores (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstraße 20
Frankfurt am Main, 60325
Germany

Frankfurt School of Finance & Mangement. ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Salvatore Perdichizzi

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

Alessio Reghezza

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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