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Being stranded with fossil fuel reserves? Climate policy risk and the pricing of bank loans

Manthos D. Delis et al.

Financial Markets, Institutions and Instruments2024https://doi.org/10.1111/fmii.12189article
AJG 3ABDC A
Weight
0.78

Abstract

Do banks price the risk of stranded fossil fuel reserves? To address this question, we hand collect global data on corporate fossil fuel reserves from 2002 to 2016, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms — along their climate policy exposure — to other firms. We find that banks price climate policy exposure, especially after 2015. We also uncover that our main effect further increases for loans with longer maturity, that loan size to fossil fuel firms increases, and that ‛Green’ banks also charge higher loan rates to fossil fuel firms.

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https://doi.org/https://doi.org/10.1111/fmii.12189

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@article{manthos2024,
  title        = {{Being stranded with fossil fuel reserves? Climate policy risk and the pricing of bank loans}},
  author       = {Manthos D. Delis et al.},
  journal      = {Financial Markets, Institutions and Instruments},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.1111/fmii.12189},
}

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Being stranded with fossil fuel reserves? Climate policy risk and the pricing of bank loans

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Evidence weight

0.78

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact1.00 × 0.4 = 0.40
M · momentum1.00 × 0.15 = 0.15
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.