Review of Financial Studies· 2026Q1
Carbon Emissions and the Bank-Lending Channel
- 232citations
- Q1SCImago
- 2026year
Short summary
Firms with higher carbon emissions that previously borrowed from banks with climate commitments receive 10-15% less credit, leading to reduced debt, leverage, size, and investment.
AI-generated from the title and abstract; the full text is not read.
Key points
- Firms with higher carbon emissions that previously borrowed from banks with climate commitments receive 10-15% less credit.
- This reduction in credit is a supply-side shift by banks, not explained by borrower risk.
- Affected firms subsequently reduce debt, leverage, firm size, and investment.
- The study found no reduction in future emissions from affected firms, suggesting potential greenwashing.
AI-generated from the title and abstract; the full text is not read.
Abstract
Abstract We study how firm-level carbon emissions affect bank lending and real outcomes in a sample of global firms with syndicated loans. We exploit bank-level climate commitments as firm-level shocks to lending relationships, using firms' prior credit exposures to identify credit supply effects. Firms with higher emissions that previously borrowed from committed banks receive less bank credit. Evidence from lending volumes, prices, and within-firm-time loan-level data indicates a supply-side shift away from high-emission firms, not explained by borrower risk. Affected firms reduce debt, leverage, size, and investment, yet we find no reduction in future emissions, instead documenting evidence consistent with greenwashing. (JEL G21, G23, G30, D62, Q50)
The authors' abstract, as published at the source. Review of Financial Studies, 2026 · DOI ↗
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Field: Economics and Econometrics Finance
FinanceEconomics, Econometrics and FinanceEconomics and Econometrics