Climate change-related regulatory risks and bank lending

We analyze how firms’ climate change-related regulatory risks affect banks’ lending. Exploiting the Paris Agreement in a difference-in-differences setting, we find that effects depend on how borrowers will be affected by regulation as well as the stringency of the existing regulatory environment where firms are located. Firms that benefit from regulation receive more credit only if located in more stringent regulatory environments. Conversely, firms hurt by regulation receive more credit if located in less stringent environments or if linked to banks with a portfolio tilted towards lending to negatively impacted firms.

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Publication Details

Journal
Journal of International Economics
Published
2025-09-01
DOI
https://doi.org/10.1016/j.jinteco.2025.104156
Citations
7
Primary Topic
Sustainable Finance and Green Bonds
Type
article
Field-Weighted Citation Impact
15.45
Controls
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article

Climate change-related regulatory risks and bank lending

Isabella Mueller, Eleonora Sfrappini
7 citations
Journal of International Economics
Sustainable Finance and Green Bonds
15.45
article

Climate change-related regulatory risks and bank lending

Isabella Mueller, Eleonora Sfrappini
article en
7 citations

Abstract

We analyze how firms’ climate change-related regulatory risks affect banks’ lending. Exploiting the Paris Agreement in a difference-in-differences setting, we find that effects depend on how borrowers will be affected by regulation as well as the stringency of the existing regulatory environment where firms are located. Firms that benefit from regulation receive more credit only if located in more stringent regulatory environments. Conversely, firms hurt by regulation receive more credit if located in less stringent environments or if linked to banks with a portfolio tilted towards lending to negatively impacted firms.

Journal of International EconomicsVol. 158
Halle Institute for Economic Research (DE), University of St Andrews (GB)
Openalex Percentile: Top 1%
Sustainable Finance and Green Bonds
15.45
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