Carbon taxes and the geography of fossil lending

Luc Laeven and Alexander Popov

No 2762, Working Paper Series from European Central Bank

Abstract: Using data on syndicated loans, we find that the introduction of a carbon tax is associated with an increase in domestic banks’ lending to coal, oil, and gas companies in foreign countries. This effect is particularly pronounced for banks with large prior fossil-lending exposures, suggesting a role for bank specialization. Lending to private companies in foreign markets increases relatively more, which points to an intensification of banks’ 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 environ-mental regulation and bank supervision. JEL Classification: F3, G15, G21, H23, Q5

Keywords: carbon taxes; climate change; cross-border lending (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-ban, nep-ene, nep-env and nep-fdg
Note: 261593
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Carbon taxes and the geography of fossil lending (2023)
Working Paper: Carbon Taxes and the Geography of Fossil Lending (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20222762

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