Carbon taxes and the geography of fossil lending

Luc Laeven and Alexander Popov

Journal of International Economics, 2023, vol. 144, issue C

Abstract: Using data on syndicated loans, we find that the introduction of a carbon tax is associated with a decline (increase) in bank lending to coal, oil, and gas companies in domestic (foreign) markets. This manifestation of tax arbitrage is particularly pronounced for banks with large fossil-lending exposures, suggesting a role for bank specialization. Lending to private companies in foreign markets increases relatively more, implying bank incentives to avoid public scrutiny. We also find that banks reallocate a relatively larger share of their fossil loan portfolio to countries with less strict environmental regulation and bank supervision.

Keywords: Carbon taxes; Cross-border lending; Climate change (search for similar items in EconPapers)
JEL-codes: F3 G15 G21 H23 Q5 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Carbon taxes and the geography of fossil lending (2022)
Working Paper: Carbon Taxes and the Geography of Fossil Lending (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:144:y:2023:i:c:s0022199623000831

DOI: 10.1016/j.jinteco.2023.103797

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