Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334644 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12288
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
We study the impact of carbon pricing on household finance using European microdata on loans for internal combustion engine vehicles. Exploiting cross-country variation in the same car models with a difference-in-differences design, we find that banks respond to Germany's carbon price announcement by raising interest rates by 0.5 percentage points, with larger increases for loans on fuel-intensive vehicles and for longer maturities. Banks also shorten loan maturity, reduce amounts, and shift to linear repayments, while households choose more fuel-efficient new cars. Captive banks respond more strongly than commercial banks. Collateral and default risk channels jointly explain these adjustments, highlighting household finance as a key transmission channel of climate policy.
Subjects: 
credit pricing
climate policies
climate transition risk
JEL: 
G21
G50
G51
Q54
Q58
Document Type: 
Working Paper
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