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Do banks fuel climate change?

Alessio Reghezza, Yener Altunbas (), David Marques-Ibanez (), Rodriguez d’Acri, Costanza and Martina Spaggiari

No 2550, Working Paper Series from European Central Bank

Abstract: Do climate-oriented regulatory policies affect the flow of credit towards polluting corporations? We match loan-level data to firm-level greenhouse gas emissions to assess the impact of the Paris Agreement. We find that, following this agreement, European banks reallocated credit away from polluting firms. In the aftermath of President Trump’s 2017 announcement that the United States was withdrawing from the Paris Agreement, lending by European banks to polluting firms in the United States decreased even further in relative terms. It follows that green regulatory initiatives in banking can have a significant impact combating climate change. JEL Classification: E51, G28, H23

Keywords: climate change; difference-in-differences; loan-level data; Paris Agreement; Trump (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-reg
Note: 328790
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Handle: RePEc:ecb:ecbwps:20212550