Asset Overhang and Technological Change

Climate transition risk and bank lending

“…The data are aggregated at two levels. As in Degryse et al (2020), the Facility-Lead arranger sample is obtained by associating each lead bank with the corresponding facility, treating the facility-leader pairing as the unit of observation. 7 This approach allows us to better control for more granular individual bank time-varying and timeinvariant characteristics.…”

“…Furthermore, as De Haas and Popov (2019) find, financial markets may be more effective than banks in influencing the meeting of climate change‐related goals. It follows that the banking system, rather than promoting, may actually slow the green transition, by preventing the financing of entry and innovation in industries most exposed to green technology externalities (Degryse et al 2020). Hence, determining how banks react to higher climate risk remains an empirical question.…”

When green meets green

“…They document that economies that rely relatively more on equity than debt (banking) financing pollute less suggesting that stock markets better reallocate investment to less polluting industries. Degryse et al (2022) argue that banking can cause barriers to the green economy as the entry of innovative and green firms in polluting industries risks devaluating banks' legacy positions with incumbent clients. Our paper provides evidence that environmental consciousness of banks could play a positive role in the green transition by granting cheaper loans to firms exhibiting a similar attitude.…”

Carbon taxes and the geography of fossil lending

“…Goetz (2019) and Levine, Lin, Wang, and Xie (2019) show that more favorable funding conditions lead firms to reduce their toxic emissions. Degryse, Roukny, and Tielens (2020)…”