Does climate change affect bank lending behavior?
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We examine how banks adjust credit supply in areas with higher exposure to climate risks by utilizing the province-level air pollution and loan growth data of a large emerging market, Turkey, following the Paris Agreement in 2015. Our results show that banks limit their credit extension to more polluted provinces in the post-agreement interval, implying that banks consider climate change-related risks and adjust their credit provisioning accordingly. Our baseline findings are intact against a myriad of robustness checks. We also find that the shift in the climate risk-credit provisioning nexus is asymmetric depending on the levels of air pollution.
Aslan , C , Bulut , E , Cepni , O & Yilmaz , M H 2022 , ' Does climate change affect bank lending behavior? ' , Economics Letters , vol. 220 , 110859 . https://doi.org/10.1016/j.econlet.2022.110859
Copyright © 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
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