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Do Energy Efficient Firms Have Better Access to Finance?

Author

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  • Philipp-Bastian Brutscher
  • Pauline Ravillard
  • Gregor Semieniuk

Abstract

Improving energy efficiency quickly is key to mitigating climate change and requires improvements implemented in firms. As these require upfront investments, good access to external finance is important. Theory suggests that information asymmetries may prevent lenders from including energy efficiency into their lending assessment, even though higher energy efficiency increases firm cost-com-petitiveness and its collateral value. Empirically, little is known about the impact of energy efficiency on access to external finance. For the first time, we examine empirically the effect of a firm’s higher energy efficiency on their ability to obtain loans in European Union countries by exploiting a unique firm-level dataset. We find that energy efficiency has no effect on the ability of a firm to obtain external financing compared to other indicators on the financial or operational health of the firm. The results reveal an unexploited potential for energy efficiency policy to signal when firms are energy efficient.

Suggested Citation

  • Philipp-Bastian Brutscher & Pauline Ravillard & Gregor Semieniuk, 2021. "Do Energy Efficient Firms Have Better Access to Finance?," The Energy Journal, , vol. 42(6), pages 171-198, November.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:6:p:171-198
    DOI: 10.5547/01956574.42.6.pbru
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    References listed on IDEAS

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    1. Lee, Neil & Sameen, Hiba & Cowling, Marc, 2015. "Access to finance for innovative SMEs since the financial crisis," Research Policy, Elsevier, vol. 44(2), pages 370-380.
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    4. Annalisa Ferrando & Klaas Mulier, 2015. "Firms’ Financing Constraints: Do Perceptions Match the Actual Situation?," The Economic and Social Review, Economic and Social Studies, vol. 46(1), pages 87-117.
    5. Ellis Scharfenaker & Gregor Semieniuk, 2017. "A Statistical Equilibrium Approach to the Distribution of Profit Rates," Metroeconomica, Wiley Blackwell, vol. 68(3), pages 465-499, July.
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    Cited by:

    1. Caporale, Guglielmo Maria & Donati, Cristiana & Spagnolo, Nicola, 2023. "Small and medium sized European firms and energy saving measures: The role of financing," Energy Policy, Elsevier, vol. 179(C).
    2. Guglielmo Maria Caporale & Cristiana Donati & Nicola Spagnolo, 2022. "Small and Medium Sized European Firms and Energy Efficiency Measures: A Probit Analysis," CESifo Working Paper Series 10066, CESifo.

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    More about this item

    Keywords

    Energy efficiency; Access to external finance; EU firms; Information asymmetry; Building energy consumption;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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