Relationship Banking and Corporate Green Investments

Lucas Marchand (), Céline Meslier () and Amine Tarazi ()
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Lucas Marchand: LAPE - Laboratoire d'Analyse et de Prospective Economiques - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Céline Meslier: LAPE - Laboratoire d'Analyse et de Prospective Economiques - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Amine Tarazi: LAPE - Laboratoire d'Analyse et de Prospective Economiques - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: This paper provides novel evidence that relationship banking can impede, rather than facilitate, firms' environmental investments. Using unique plant-level data on green investments matched with bank-firm relationship records for French manufacturers, we exploit the 2016 French floods as an exogenous shock to environmental awareness. Our difference-in-differences estimates show that long-term banking ties reduce the likelihood of pollution-prevention investment, particularly when firms are heavily dependent on their main lenders. This result reflects the unconventional nature of green investments which erodes banks' accumulated private information, a friction that grows with the scale of the required transition.

Keywords: relationship banking; informational capital; green investments (search for similar items in EconPapers)
Date: 2026-07-14
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