Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies

Mattia Guerini, Giovanni Marin and Francesco Vona
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Mattia Guerini: Università degli Studi di Brescia and Fondazione Eni Enrico Mattei

No 2025.31, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We study how monetary policy shapes firm level carbon emissions. Our identification strategy exploits the European Central Bank’s July 2012 move to the zero lower bound as a plausibly exogenous easing of credit supply, combined with rich administrative and survey data on French manufacturing firms from 2000–2019. Using a difference-in-differences design with debt-to-asset ratios as exposure, we find that financially constrained firms cut emissions by about 9.4% more than unconstrained ones. This effect primarily stems from improvements in energy efficiency, lower carbon intensity of energy, and general productivity improvements associated with capital deepening that outweighed modest scale effects. Small and medium firms drive these results, while large and EU ETS regulated firms show no significant response. On average, emissions fell by 3.3% per year, summing up to 5.3 million tonnes of CO2 saved. Despite the smaller marginal effects, total carbon savings due to the monetary easing are comparable to the savings from the EU ETS, highlighting the untargeted nature of the policy.

Keywords: Financial constraints; credit supply; firm level carbon emissions; climate policies (search for similar items in EconPapers)
JEL-codes: D22 Q48 Q52 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ene, nep-env, nep-eur, nep-mac and nep-sbm
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Related works:
Working Paper: Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies (2025)
Working Paper: Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies (2025)
Working Paper: Can Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies (2025)
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