The effects of a green monetary policy on firms financing costs

Andrea Bacchiocchi (), Sebastian Ille and Germana Giombini
Additional contact information
Andrea Bacchiocchi: Department of Economics, Society & Politics, Università di Urbino Carlo Bo

No 2301, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: The monetary policy operations of a Central Bank (CB) involve allocation decisions when purchasing assets and taking collateral. A green monetary policy aims to steer or tilt the allocation of assets and collateral towards low-carbon industries, to reduce the cost of capital for these sectors in comparison to high-carbon ones. Starting from a corporate bonds purchase program (e.g. CSPP) that follows a carbon-neutral monetary policy, we analyze how a shift in the CB portfolio allocation towards bonds issued by low-carbon companies can favor green firms in the market. Relying on optimal portfolio theory, we study how the CB might include the risk related to the environmental sustainability of firms in its balance sheet. In addition, we analyze the interactions between the neutral or green CB re-balancing policy and the evolutionary choice (i.e. by means of expo- nential replicator dynamics) of a population of firms that can decide to be green or not according to bonds borrowing cost.

Keywords: Monetary Policy; Optimal Portfolio Allocation; Environmental Economics; Interacting Agents; Evolutionary Dynamics (search for similar items in EconPapers)
JEL-codes: C61 C73 E52 E58 G11 Q50 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023, Revised 2023
New Economics Papers: this item is included in nep-ban, nep-cba, nep-ene, nep-env and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_23_01.pdf First version, 2023 (application/pdf)

Related works:
Journal Article: The effects of a green monetary policy on firms financing cost (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:urb:wpaper:23_01

Access Statistics for this paper

More papers in Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini Contact information at EDIRC.
Bibliographic data for series maintained by Carmela Nicoletti ().