Management Science· 2026Q1
“Glossy Green” Banks: The Disconnect Between Environmental Disclosures and Lending Activities
- 53citations
- Q1SCImago
- 2026year
Short summary
Banks emphasizing green lending in disclosures do not reduce their environmental impact and may even increase credit to "brown" borrowers without higher costs or shorter maturities.
AI-generated from the title and abstract; the full text is not read.
Key points
- Banks emphasizing green disclosures do not reduce environmental impact.
- These banks extend higher volumes of credit to "brown" borrowers.
- No evidence of higher interest rates or shorter debt maturities for brown borrowers.
- Lending to brown borrowers is linked to their financial underperformance, not green transition financing.
AI-generated from the title and abstract; the full text is not read.
Abstract
Using confidential information on banks’ portfolios, we show that banks that emphasize the sustainability of their lending policies in their disclosures do not exhibit a reduced environmental impact and if anything, they extend a higher volume of credit to brown borrowers, without charging higher interest rates or shortening debt maturity. These results cannot be attributed to the financing of borrowers’ transition towards greener technologies. Examining the mechanisms behind the strategic disclosure choices reveals that banks extend credit to existing brown borrowers, especially those who are financially underperforming.
The authors' abstract, as published at the source. Management Science, 2026 · DOI ↗
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Field: Finance
FinanceEconomics, Econometrics and Finance