Environmental incidents and sustainability pricing provisions / Huyen Nguyen, Sochima Uzonwanne ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
Anzeigen / Download2.08 MB
Discovery
1897936974
URN
urn:nbn:de:gbv:3:2-1073432
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, August 2024
Umfang
1 Online-Ressource (III, 48 Seiten, 2,08 MB) : Diagramme
Ausgabevermerk
Sprache
eng
Anmerkungen
Literaturverzeichnis: Seite 23-27
Inhaltliche Zusammenfassung
We investigate whether lenders employ sustainability pricing provisions to manage borrowers’ environmental risk. Using unexpected negative environmental incidents of borrowers as exogenous shocks that reveal information on environmental risk, we find that lenders manage borrowers’ environmental risk by conventional tools such as imposing higher interest rates, utilizing financial and net worth covenants, showing reluctance to refinance, and demanding increased collateral. In contrast, the inclusion of sustainability pricing provisions in loan agreements for high environmental risk borrowers is reduced by 11 percentage points. Our study suggests that sustainability pricing provisions may not primarily serve as risk management tools but rather as instruments to attract demand from institutional investors and facilitate secondary market transactions.
Schriftenreihe
IWH-Diskussionspapiere ; 2024, no. 17 (August 2024) ppn:837399270