Work

Firms’ climate risks and bank lending: Evidence from the COVID-19 crisis

Year: 2024

Type: article

Abstract: Climate risks influence banks' lending behavior during the COVID-19 pandemic. Our study uses Japanese data to show that banks reduced lending to high CO2 intensity firms at the start of the crisis and the following year. However, banks that previously invested heavily in these firms increased their lending, especially to firms with significant declines in sales. Our results also reveal that banks' lending to high CO2 intensity firms varies according to their capital buffers. These findings hold even when considering zombie lending and bank relationships, indicating that banks took climate risks into account when reallocating funds during a liquidity shock.

Source: Finance research letters

DOI: 10.1016/j.frl.2024.106606

Author: Masayo Shikimi

Institution: Nagasaki University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,350