Characteristics of Green Loan Users and the Green Policy Mix

Author Name Anna L. SOBIECH (University of Cologne / University of St Andrews) / UCHIDA Hirofumi (Kobe University)
Creation Date/NO. October 2023 23-E-072
Research Project Study group on corporate finance and firm dynamics
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We analyse the usage of green loans under a public green loan program and document a positive link with borrower financial health. Green loan users have better credit ratings, higher sales growth, and lower leverage. The link remains stable in face of significantly changing conditions for green investments and heightened green policy uncertainty induced by changes in governments’ green policy mix. Green loan users also exhibit better ex-post performance and lower default probability. The results imply that the screening undertaken by the lender matters for efficient green loan provision and highlight the important role of public loan programs in the green policy mix.