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Value-Driven Bankers and the Granting of Credit to Green Firms

Author

Listed:
  • Di Bu

    (Macquarie University)

  • Matti Keloharju

    (Aalto University; Research Institute of Industrial Economics; CEPR)

  • Yin Liao

    (Macquarie University; Australian National University)

  • Steven Ongena

    (University of Zurich; Swiss Finance Institute; KU Leuven; NTNU Business School; CEPR)

Abstract

How do bankers treat green firms? Utilizing unique loan application and banker preference data from a mid-sized bank, we find that customer managers, serving as front-line bankers, provide more favorable recommendations for green firms, particularly when they hold strong green values. However, a minority of environmentally skeptical bankers counteract this trend. These brown managers fake green interests when their recommendations bear no weight, and conversely, diminish their endorsements to green firms when they do hold significance. Additionally, brown loan officers, acting as superiors to these managers, strive to offset positive green firm evaluations by downgrading them.

Suggested Citation

  • Di Bu & Matti Keloharju & Yin Liao & Steven Ongena, 2023. "Value-Driven Bankers and the Granting of Credit to Green Firms," Swiss Finance Institute Research Paper Series 23-113, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp23113
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    More about this item

    Keywords

    Green bank lending; customer managers; loan officers; values;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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