The Preferential Treatment of Green Bonds

Giovanardi, Francesco; Kaldorf, Matthias; Radke, Lucas; Wicknig, Florian

doi:10.2139/ssrn.4350793

Cited by 5 publications

(3 citation statements)

References 24 publications

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“…Relative to these papers, we focus on a different and unexplored dimension of heterogeneity. Some recent contributions analyze central bank policies with a climaterelated objective and discuss implications for financial stability (e.g., see Bolton et al, 2020;Papoutsi et al, 2022;Ferrari and Landi, 2023;Giovanardi et al, 2023). Our results are consistent with monetary policy shocks shaping carbon transition risk even absent an explicit climate mandate, and highlight the need for additional research on how central banks affect the transition to a low-carbon economy.…”

Section: Introductionsupporting

confidence: 75%

Monetary Policy, Carbon Transition Risk, and Firm Valuation

Döttling,

Lam

2023

Preprint

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This paper empirically examines the interaction between monetary policy and carbon transition risk. Using an event study design, we find that the stock prices of firms with higher carbon emissions are more responsive to monetary policy shocks identified from high-frequency movements in Fed Funds futures around Federal Open Market Committee (FOMC) announcements. Cross-sectional tests reveal that this effect is driven by firms that are more capital intensive, with lower ESG ratings, with greater climate risk exposures, or without climate abatement plans. Using instrumental-variable local projections, we find that high-emission firms reduce emissions relative to low-emission firms, but slow down these efforts when monetary policy is restrictive. Taken together, our results indicate that monetary policy shapes the path to carbon neutrality irrespective of whether central banks embrace a climate target.

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Section: Introductionsupporting

confidence: 75%

Monetary Policy, Carbon Transition Risk, and Firm Valuation

Döttling,

Lam

2023

Preprint

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“…Research shows that green bonds have additional drawbacks for individual investors in contrast to traditional bonds, including liquidity and volatility issues. Additionally, the issuance of green bonds incurs greater costs compared to conventional bonds (Giovanardi, et al, 2023).…”

Section: Introductionmentioning

confidence: 99%

Green Banking in Pakistan: A Qualitative Study

Khan,

Laeeque,

Munir

2024

ABGMCE

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In the face of escalating global warming, the call for transformative action becomes increasingly urgent. As industries and consumers grapple with the imperative of environmental stewardship, the banking sector takes centre stage in the journey towards a sustainable future. Green Banking is a ground-breaking shift aimed at harmonizing financial practices with ecological imperatives. This study delves into the evolving landscape of Green Banking within Pakistan, investigating its impact on customer engagement and institutional viability. Through qualitative research methods, interviews with key stakeholders from leading Pakistani banks unveil a nuanced interplay of challenges and opportunities. While initial reservations and differing viewpoints persist among stakeholders, a growing consensus emerges regarding the inherent benefits of Green Banking. Drawing upon theoretical frameworks including theory of planned behaviour, ecological consumerism, innovation diffusion theory, and prospect theory, our analysis highlights the increasing allure of Green Banking initiatives for Pakistani banks. Despite enduring obstacles, our findings underscore the necessity for Pakistani banks to embrace and advocate Green Banking, not only as a moral obligation but also as a strategic imperative for maintaining market relevance and sustainability.

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“…6 Another related strand of literature uses DSGE models with financial frictions to simulate the effect and optimal design of macroprudential and monetary policies in the presence of environmental externalities (Carattini et al, 2021;Dafermos et al, 2018;Diluiso et al, 2020;Ferrari and Landi, 2021;Giovanardi and Kaldorf, 2023). We contribute by providing analytical results that allow us to compare different policy tools, pinpoint the friction motivating financial regulation, and study the impact of financing instruments on equilibrium policy.…”

Section: Introductionmentioning

confidence: 99%

Too Levered for Pigou: Carbon Pricing, Financial Constraints, and Leverage Regulation

Döttling

Rola-Janicka²

2023

Preprint

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We analyze jointly optimal carbon pricing and financial policies under financial constraints and endogenous climate-related transition and physical risks. The socially optimal emissions tax may be above or below a Pigouvian benchmark, depending on whether physical climate risks have a substantial impact on collateral values. We derive necessary conditions for emissions taxes alone to implement a constrained-efficient allocation, and show a cap-and-trade system or green subsidies may dominate emissions taxes because they can be designed to have a less adverse effect on financial constraints. Additionally introducing leverage regulation can be welfare-improving if environmental policies have a direct negative effect on financial constraints. Furthermore, our analysis highlights the positive effect of carbon price hedging markets on equilibrium environmental policies.

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The Preferential Treatment of Green Bonds

Cited by 5 publications

References 24 publications

Monetary Policy, Carbon Transition Risk, and Firm Valuation

Monetary Policy, Carbon Transition Risk, and Firm Valuation

Green Banking in Pakistan: A Qualitative Study

Too Levered for Pigou: Carbon Pricing, Financial Constraints, and Leverage Regulation

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