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

Mattia Guerini (), Giovanni Marin and Francesco Vona ()
Additional contact information
Mattia Guerini: Department of Economics and Management, University of Brescia, Italy.
Francesco Vona: Università degli Studi di Milano, Italy; FEEM;

No 1525, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

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 ð ¶ð ‘‚2 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)
Pages: 61 pages
Date: 2025-12, Revised 2025-12
New Economics Papers: this item is included in nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/1525.pdf First version, 2025 (application/pdf)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/1525.pdf Revised version, 2025 (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:srt:wpaper:1525

Access Statistics for this paper

More papers in SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies
Bibliographic data for series maintained by Alessandro Palma ().