Economics at your fingertips  

Differentiated green loans

Louis-Gaëtan Giraudet, Anna Petronevich and Laurent Faucheux

Energy Policy, 2021, vol. 149, issue C

Abstract: Scaling up home energy retrofits requires that associated loans be priced efficiently. Using a unique dataset of posted loan prices scraped from online simulators made available by French credit institutions, we examine the differentiation of interest rates in relation to project risk. Crucially, our data are immune from sorting bias based on borrower characteristics. We find that greener, arguably less risky, automobile projects carry lower interest rates, but greener home retrofits do not. On the other hand, conventional automobiles carry lower interest rates than do conventional home retrofits, despite arguably similar risk. Our results are robust to a range of robustness checks, including placebo tests. They together suggest that lenders use underlying assets to screen borrower's unobserved willingness to pay, which can cause under-investment in home energy retrofits. We thereby point to a new form of the energy efficiency gap. This has important policy implications in that it can explain low uptake of zero-interest green loan programs.

Keywords: Personal loan; Home energy retrofit; Screening; Data scraping; Online prices; Energy efficiency gap (search for similar items in EconPapers)
JEL-codes: D14 G21 Q41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
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:

DOI: 10.1016/j.enpol.2020.111861

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2021-06-30
Handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520305784