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When green meets green

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  • Degryse, Hans
  • Goncharenko, Roman
  • Theunisz, Carola
  • Vadasz, Tamas

Abstract

We investigate whether and how the environmental consciousness (greenness for short) of firms and banks is reflected in the pricing of bank credit. Using a large international sample of syndicated loans over the period 2011–2019, we find that green banks indeed reward firms for being green in the form of cheaper loans—however, only after the ratification of the Paris Agreement in 2015. Such loans are also more likely term loans, with fewer covenants and reflect firms' project choices. Thus, we find that environmental attitudes matter “when green meets green.”

Suggested Citation

  • Degryse, Hans & Goncharenko, Roman & Theunisz, Carola & Vadasz, Tamas, 2023. "When green meets green," Journal of Corporate Finance, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:corfin:v:78:y:2023:i:c:s0929119923000044
    DOI: 10.1016/j.jcorpfin.2023.102355
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    More about this item

    Keywords

    Paris agreement; Green firms; Green banks; Bank lending;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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