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Credit supply and green Investments

Author

Listed:
  • Accetturo, Antonio

    (Economic Research Unit, Trento, Bank of Italy)

  • Barboni, Giorgia

    (bUniversity of Warwick, Warwick Business School and CAGE)

  • Cascarano, Michele

    (Economic Research Unit, Trento, Bank of Italy)

  • Garcia-Appendini, Emilia

    (Department of Banking and Finance, University of Zurich)

  • Tomasi, Marco

    (University of Trento)

Abstract

Does an increase in credit supply affect firms’ likelihood to invest in green technologies? To answer this question, we use text algorithms to extract information on green investments from the comments to the financial statements of Italian SMEs between 2015 and 2019. To identify the effect of credit supply, we use all loans disbursed by banks operating in Italy to construct a firm-specific time-varying instrument for credit availability. We find a large positive elasticity of green investments to credit supply. The effect is concentrated among firms with high availability of internal capital and in areas with higher preferences for environmental protection. Subsidies and market competition can spur green investments if combined with environmental awareness. JEL codes: G32 ; Q54 ; Q55

Suggested Citation

  • Accetturo, Antonio & Barboni, Giorgia & Cascarano, Michele & Garcia-Appendini, Emilia & Tomasi, Marco, 2022. "Credit supply and green Investments," CAGE Online Working Paper Series 615, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:615
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/wp615.2022.pdf
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    More about this item

    Keywords

    Credit supply ; CO2 emissions ; green investments ; climate finance ; bank credit;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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