Article in Journal

Uncoordinated Climate Policies: Implications for Cross-Border Lending

Emanuela Benincasa, Gazi Kabas, Steven Ongena
CESifo, Munich, 2023

EconPol Forum 24 (1), 28-30
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  • There are substantial differences across countries regarding climate policy stringency
  • Banks react to a stricter climate policy at home by increasing their cross-border lending to countries with laxer climate policies
  • The evidence is consistent with the adverse effect of transitional climate risks on firms, possibly reducing banks’ domestic loan portfolio performance
  • Global coordination in climate policies is needed to prevent race-to-the-bottom behavior

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