Publications
Publications
- 2024
Measurement and Effects of Bank Exit Policies
By: Daniel Green and Boris Vallée
Abstract
We study whether exit policies by financial institutions have financial and real consequences on the firms they target, using bank coal exit policies as a laboratory. In contrast to theories assuming high capital substitutability, we find large effects of these policies. Bank exit policies negatively affect both the financing and operation of coal assets. Substitution to other sources and providers of capital appears to be limited. Coal power plants owned by firms exposed to bank exit policies are more likely to be retired, translating into lower CO2 emissions. Exit policies have reduced coal CO2e emissions by an estimated one gigaton.
Keywords
Coal Power; Climate Change; Investment; Environmental Sustainability; Policy; Financing and Loans; Energy Industry; Banking Industry
Citation
Green, Daniel, and Boris Vallée. "Measurement and Effects of Bank Exit Policies." Working Paper, January 2024. (Revise and Resubmit at the Journal of Financial Economics.)