Climate policy and cross-border lending: evidence from the syndicated loan market

Emanuela Benincasa

Economic and Political Studies, 2021, vol. 9, issue 4, 463-476

Abstract: Do cross-country differences in climate policy influence bank lending? This paper focusses on the period 2007–2017 and uses syndicated loan-level data to examine if the stringency of home-country climate policies increases cross-border bank lending. Loan fixed effects allow us to disentangle loan demand from supply and to control for unobserved and observed loan and firm characteristics. I find evidence that a strict home-country climate policy is associated with an increase in banks’ cross-border loan shares. This suggests that the transition to a low-carbon economy might be threatened if global coordination between governments is not enforced.

Date: 2021
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DOI: 10.1080/20954816.2021.1976904

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