Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311101 
Year of Publication: 
2024
Series/Report no.: 
ECB Working Paper No. 2952
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
This paper provides a first empirical analysis of the impact of the European Central Bank's (ECB's) climate-risk-related supervisory efforts on (i) climate risk exposure and related risk management of banks; and (ii) on the induced shifts in banks' portfolio choices with regard to additional green finance. From 2020 onwards, the ECB has introduced various measures to enhance climate-risk-related supervisory efforts. Our identification strategy exploits the fact that the ECB's efforts on climate supervision has only been introduced for selected banks within the European Union i.e., the Significant Institutions under the Single Supervisory Mechanism. Other banks (i.e., the Less Significant Institutions) have remained unaffected. We set up a difference-in-difference setup based on a novel data set and find a significant impact on both improvements in climate risk exposure and management and on an increase in banks' green finance activities.
Subjects: 
Banking Supervision
Climate Stress Test
Green Lending
Sustainable Finance
JEL: 
D25
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6762-4
Document Type: 
Working Paper

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