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Contribution Details
| Type | Conference Presentation |
| Scope | Discipline-based scholarship |
| Title | Being Stranded with Fossil Fuel Reserves? Climate Policy Risk and the Pricing of Bank Loans |
| Organization Unit | |
| Authors |
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| Presentation Type | paper |
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published electronically before print/final form (Epub ahead of print) |
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| Event Title | Faculty Seminar Series |
| Event Type | other |
| Event Location | Johanens Gutenberg Universität, Mainz |
| Event Start Date | December 17 - 2019 |
| Event End Date | December 17 - 2019 |
| Abstract Text | Do banks price the risk of stranded fossil fuel reserves? To address this question, we hand collect global data on corporate fossil fuel reserves, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms — along their climate policy exposure — to non-fossil fuel firms. We find that before 2015 banks did not price climate policy exposure. After 2015, however, our results show an increase in the cost of credit by 16 basis points for a fossil fuel firm with mean proved reserves, implying an increase in the total cost of borrowing for the mean loan by USD 1.5 million. We also provide some evidence that “green banks” charge marginally higher loan rates to fossil fuel firms. |
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