Do Transparent Banks Do More Green Lending? Evidence from Climate Stress Tests
摘要
This chapter explores whether the European Central Bank's climate stress tests influence banks' green lending, particularly the amount of green and sustainability-linked loans. The first EU-wide climate stress test, conducted by the European Banking Authority (EBA) in 2020, assessed banks' climate risk exposure. These stress tests serve as a regulatory tool to ensure banks incorporate environmental information into lending decisions. Stress tests have gained credibility over time, and their findings influence market perceptions. However, banks often face challenges due to the opacity of their strategies, which extends to their borrower information. Without proper verification from auditors, the reliability of non-financial data, especially from small and medium-sized enterprises, remains questionable. This uncertainty can affect loan terms, such as interest rates and payment plans. Green lending, which focuses on two types of loans - green loans and sustainability-linked loans - has gained importance in the context of decarbonization efforts. For both loan types, banks must consider borrowers' environmental disclosures. I conduct an empirical investigation with the aim at addressing the complex relationship between stress test disclosures and green lending in the face of uncertainty surrounding climate risk.