Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297697 
Year of Publication: 
2024
Series/Report no.: 
IWH Discussion Papers No. 9/2024
Version Description: 
This version: 10.06.2024
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We ask if bank supervisors' efforts to combat climate change affect banks' lending and their borrowers' transition to the carbon-neutral economy. Combining information from the French supervisory agency's climate pilot exercise with borrowers' emission data, we first show that banks that participate in the exercise increase lending to high-carbon emitters but simultaneously charge higher interest rates. Second, participating banks collect new information about climate risks, and boost lending for green purposes. Third, receiving credit from a participating bank facilitates borrowers' efforts to improve environmental performance. Our findings establish a hitherto undocumented link between banking supervision and the transition to net-zero.
Subjects: 
banking supervision
carbon risk
climate stress test
green finance
syndicated loans
JEL: 
G21
G28
K11
Document Type: 
Working Paper

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