When Green Meets Green

Hans Degryse, Roman Goncharenko, Carola Theunisz and Tamas Vadasz

No 16536, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate whether and how the environmental consciousness (greenness for short) of firms and banks is reflected in the pricing of bank credit. Using a large international sample of syndicated loans over the period 2011-2019, we find that firms are indeed rewarded for being green in the form of cheaper loans -- however, only when borrowing from a green consortium of lenders, and only after the ratification of the Paris Agreement in 2015. Thus, we find that environmental attitudes matter "when green meets green." We further construct a simple stylized theoretical model to show that the green-meets-green pattern emerges in equilibrium as the result of third-degree price discrimination with regard to firms' greenness.

Keywords: Paris agreement; Green firms; Green banks; Bank lending (search for similar items in EconPapers)
JEL-codes: A13 G21 Q51 Q58 (search for similar items in EconPapers)
Date: 2021-09
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Related works:
Journal Article: When green meets green (2023)
Working Paper: When green meets green (2020)
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