Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311120 
Year of Publication: 
2024
Series/Report no.: 
ECB Working Paper No. 2969
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Combining euro-area credit register and carbon emission data, we provide evidence of a climate risk-taking channel in banks' lending policies. Banks charge higher interest rates to firms featuring greater carbon emissions, and lower rates to firms committing to lower emissions, controlling for their probability of default. Both effects are larger for banks committed to decarbonization. Consistently with the risk-taking channel of monetary policy, tighter policy induces banks to increase both credit risk premia and carbon emission premia, and reduce lending to high emission firms more than to low emission ones. While restrictive monetary policy increases the cost of credit and reduces lending to all firms, its contractionary effect is milder for firms with low emissions and those that commit to decarbonization.
Subjects: 
climate risk
carbon emissions
interest rate
lending
monetary policy
JEL: 
E52
G21
Q52
Q53
Q54
Q58
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6826-3
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.