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The carbon content of Italian loans

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  • Ivan Faiella
  • Luciano Lavecchia

Abstract

There is a growing emphasis on the possibility that climate-related financial risks – such as an abrupt transition to a low-carbon economy – might increase the financial vulnerability of borrowers with consequences for lenders and, eventually, on the financial system as a whole. This article presents a first insight on the carbon content of business loans in Italy, comparing three methods of identifying the most exposed sectors. According to our estimates, the exposure of the Italian financial system in 2018 ranged between 8 and 10.2 per cent of banks’ total assets. This information is the starting point from which to evaluate, within a climate-scenario framework, how different climate policies could influence the stability of the banking sector.

Suggested Citation

  • Ivan Faiella & Luciano Lavecchia, 2022. "The carbon content of Italian loans," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 12(3), pages 939-957, July.
    • Handle: RePEc:taf:jsustf:v:12:y:2022:i:3:p:939-957
    DOI: 10.1080/20430795.2020.1814076
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    Cited by:

    1. Louis Daumas, 2021. "Should we fear transition risks - A review of the applied literature," Working Papers 2021.05, FAERE - French Association of Environmental and Resource Economists.
    2. Gabor Szigel, 2022. "Carbon Intensity of Banks' Loan Portfolio - A Good Basis for Comparison in Case of Low-Income Countries?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(4), pages 83-102.
    3. Salvatore Cardillo & Raffaele Gallo & Francesco Guarino, 2021. "Main challenges and prospects for the European banking sector: a critical review of the ongoing debate," Questioni di Economia e Finanza (Occasional Papers) 634, Bank of Italy, Economic Research and International Relations Area.

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