Global Bank Lending under Climate Policy

Asli Demirguc-Kunt, Alvaro Pedraza, Fredy Pulga and Claudia Ruiz-Ortega ()
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Claudia Ruiz-Ortega: World Bank
Authors registered in the RePEc Author Service: Claudia Ruiz Ortega

No 631, Working Papers from Center for Global Development

Abstract: What is the response of bank foreign subsidiaries to climate policy in their host countries? We find that global banks with high environmental performance increase their presence in countries after local authorities strengthen their climate-related actions. Through their foreign subsidiaries, these banks expand their credit by 4.6 percent following an increase in one-standard deviation of the host country climate policy index. Importantly, we do not find evidence that banks with low environmental scores exit in response to climate initiatives. Our findings show that strengthening climate policy might be a win-win strategy for policymakers—in addition to addressing carbon emission reduction, climate-related initiatives also appear to attract foreign capital from lenders with strong preferences for green assets.

Keywords: Global banks; climate change; environmental performance (search for similar items in EconPapers)
JEL-codes: D62 G21 G28 Q54 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-01-31
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-res
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Global Bank Lending Under Climate Policy (2024)
Working Paper: Global Bank Lending under Climate Policy (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cgd:wpaper:631

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