Young leaders, sustainable lenders? How bank leaders’ age influences sustainable lending

This research examines the effect of the age of bank board directors and top executives on sustainable lending. Using a sample combining loan-, firm-, and bank-level data from the syndicated loan market, we find that sustainable loans are significantly less likely to be granted by a bank with older bank board directors and top executives, in line with the view that young individuals are more concerned about sustainability. This result is robust to controlling for endogeneity, using alternative models, variables, or sample. Additional estimations show that this effect is generational: a sustainable loan is more likely to be granted by a bank with a higher presence of millennials, while the opposite is true for the baby boomers and the silent generation. In particular, the presence of both younger and older bank leaders impacts the probability of sustainable lending. Overall, the findings suggest that younger leaders are more likely to promote sustainable lending.