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Title Global Bank Lending under Climate Policy
AuthorAsli Demirguc-Kunt, Alvaro Pedraza, Fredy Pulga, and Claudia Ruiz-Ortega
Date of Publication2023
PublisherCenter for Global Development
KeywordsClimate, Energy, and Environment, Climate Finance, Private Finance for Development
AbstractWhat is the response of bank foreign subsidiaries to climate policy in their host countries? We find that global banks with high environmental performance increase their presence in countries after local authorities strengthen their climate-related actions. Through their foreign subsidiaries, these banks expand their credit by 4.6 percent following an increase in one-standard deviation of the host country climate policy index. Importantly, we do not find evidence that banks with low environmental scores exit in response to climate initiatives. Our findings show that strengthening climate policy might be a win-win strategy for policymakers—in addition to addressing carbon emission reduction, climate-related initiatives also appear to attract foreign capital from lenders with strong preferences for green assets
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File FormatPDF
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