This study investigates the effect of the green lending propensity of banks on profitability and risk. Using a sample of 217 green facilities financing syndication worldwide, we create a variable of green lending approach measuring the weight of green loans on total credit exposure of the lead bank and investigate the effect of the green propensity so as the structure of syndication on bank accounting performance. We find two relevant findings. First, a higher propensity to green lending is associated with lower profitability, more moderate default risk, and lower credit risk than banks with a less green investment approach. Second, more collateralization and duration of green lending increase bank performance, while the larger syndicate size reduces profitability and risk. Overall, our study suggests that banks are prone to invest in green projects, but the risks may offset profitability requiring public support to empower the role of the banking sector in boosting ecological transition.

Syndicated green lending and lead bank performance / Del Gaudio, B. L.; Previtali, Daniele; Sampagnaro, G.; Verdoliva, V.; Vigne, Samuel Alexandre. - In: JOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING. - ISSN 0954-1314. - 33:3(2022), pp. 412-427. [10.1111/jifm.12151]

Syndicated green lending and lead bank performance

Previtali, D.;Vigne, S.
2022

Abstract

This study investigates the effect of the green lending propensity of banks on profitability and risk. Using a sample of 217 green facilities financing syndication worldwide, we create a variable of green lending approach measuring the weight of green loans on total credit exposure of the lead bank and investigate the effect of the green propensity so as the structure of syndication on bank accounting performance. We find two relevant findings. First, a higher propensity to green lending is associated with lower profitability, more moderate default risk, and lower credit risk than banks with a less green investment approach. Second, more collateralization and duration of green lending increase bank performance, while the larger syndicate size reduces profitability and risk. Overall, our study suggests that banks are prone to invest in green projects, but the risks may offset profitability requiring public support to empower the role of the banking sector in boosting ecological transition.
bank, credit risk, green finance, syndicated loans
Syndicated green lending and lead bank performance / Del Gaudio, B. L.; Previtali, Daniele; Sampagnaro, G.; Verdoliva, V.; Vigne, Samuel Alexandre. - In: JOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING. - ISSN 0954-1314. - 33:3(2022), pp. 412-427. [10.1111/jifm.12151]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/222784
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