IFin Seminar, José-Luis Peydró - Imperial College London "Carbon Emissions and the Bank-Lending Channel"

Institute of Finance

Data: 18/11/2021 / 12:25 - 13:40

Speaker: José-Luis Peydró - Imperial College London 

Title:     "Carbon Emissions and the Bank-Lending Channel"

Date:    November 18, 2021 

Time:    12:25 - 13:40

Room:   Virtual on Zoom invitation

Lugano Campus

 

 

Abstract
We study how firm-level carbon emissions affect bank lending and, through this channel, real decisions in a sample of global firms with syndicated loans. Using bank-level commitments to carbon neutrality to measure changes in banks’ green preferences, we show that firms with higher (lower) scope-1 emission levels borrowing from banks making commitments subsequently receive less (more) bank credit, even controlling for differences in their fundamentals. The bank decisions to reallocate credit more likely reflect their preferences for green rather than their differential response to an increased business risk. The reduction in bank lending to a brown sector lowers this sector’s real investments but even then, these firms do not improve their environmental scores.