Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/335886 
Year of Publication: 
2026
Series/Report no.: 
SAFE Working Paper No. 465
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
Transitioning to a sustainable economy and reducing air pollution hinge on appropriate economic incentives and financing conditions. The auto loan market offers a prime setting, as lenders' credit terms can either discourage or incentivize the purchase of high-pollution vehicles. Using loan-level data, we examine how captive and independent banks adjust lending conditions in response to information and regulatory shocks affecting diesel vehicles. Exploiting the 2015 diesel emissions scandal and the introduction of local circulation restrictions, we show that lending responses differ systematically across lender types, with captive banks tending to weaken, rather than reinforce, the effectiveness of environmental regulation for air pollution.
Subjects: 
Car Loans
Captive Banks
Independent Banks
Diesel Emissions Scandal
Car Circulation Restrictions
JEL: 
G21
G51
Q53
Q58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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