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Authors: Mariassunta Giannetti, Martina Jasova, Maria Loumioti, and Caterina Mendicino


Using confidential information on banks’ portfolios, inaccessible to market participants, we show that banks that emphasize the sustainability of their lending policies in their disclosures extend a higher volume of credit to brown borrowers, without charging higher interest rates or shortening debt maturity. These results cannot be attributed to the financing of borrowers’ transition towards greener technologies. Examining the mechanisms behind the strategic disclosure choices, we highlight that banks extend credit to existing brown borrowers,
especially if they are financially underperforming.

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