Financing conditions and toxic emissions
No 254, SAFE Working Paper Series from Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt
Exploiting heterogeneity in U.S. firms' exposure to an unconventional monetary policy shock that reduced debt financing costs, I identify the impact of financing conditions on firms' toxic emissions. I find robust evidence that lower financing costs reduce toxic emissions and boost investments in emission reduction activities, especially capital-intensive pollution control activities. The effect is stronger for firms in noncompliance with environmental regulation. Examining the ability of regaining regulatory compliance by implementing pollution control activities I find that only capital-intensive activities help firms regaining compliance. These findings underscore the impact of firms' financing conditions for emissions and the environment.
Keywords: Toxic emissions; Financing conditions; Bond markets; Unconventional Monetary Policy (search for similar items in EconPapers)
JEL-codes: G32 E52 Q52 Q53 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:254
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