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Bank Liquidity, Credit Supply, and the Environment

Author

Listed:
  • Ross Levine

    ()

  • Chen Lin

    ()

  • Zigan Wang

    ()

  • Wensi Xie

    ()

Abstract

The paper evaluates the impact of the credit conditions facing corporations on their emissions of toxic air pollutants. Exploiting cross-county, cross-time shale discoveries that generated liquidity windfalls at local bank branches, it constructs measures of (1) the degree to which banks in non-shale counties, i.e., counties where shale was not discovered, receive liquidity shocks through their branches in shale counties and (2) the degree to which a corporation in a non-shale county has a relationship lender that receives liquidity shocks through its branches. From both the county- and firm-level analyses, the paper discovers that positive shocks to credit conditions reduce corporate pollution.

Suggested Citation

  • Ross Levine & Chen Lin & Zigan Wang & Wensi Xie, 2018. "Bank Liquidity, Credit Supply, and the Environment," Working Papers id:12565, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:12565
    Note: Institutional Papers
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    References listed on IDEAS

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    Cited by:

    1. De Haas, Ralph & Popov, Alexander, 2018. "Financial development and industrial pollution," LSE Research Online Documents on Economics 91310, London School of Economics and Political Science, LSE Library.
    2. Littke, Helge C. N., 2018. "Channeling the Iron Ore Super-Cycle: The role of regional bank branch networks in emerging markets," IWH Discussion Papers 11/2018, Halle Institute for Economic Research (IWH).

    More about this item

    Keywords

    eSS; trade; correlation; macroeconomic implications; technology; macro counterfactuals; trade partners; self-trade shares; micro estimates; real wages; air quality; toxic air pollutants;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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