“Glossy green” banks: the disconnect between environmental disclosures and lending activities

Mariassunta Giannetti, Martina Jasova, Maria Loumioti and Caterina Mendicino

No 2882, Working Paper Series from European Central Bank

Abstract: Using confidential information on banks’ portfolios, inaccessible to market participants, we show that banks that emphasize the environment in their disclosures 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 and are robust to controlling for banks’ climate risk discussions. Examining the mechanisms behind the strategic disclosure choices, we highlight that banks are hesitant to sever ties with existing brown borrowers, especially if they exhibit financial underperformance. JEL Classification: G11, G15, G21

Keywords: credit exposure; financial institutions; strategic disclosure; sustainability reporting; zombie lending (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-ban, nep-eec, nep-ene and nep-env
Note: 1774743
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232882

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