Value-Driven Bankers and the Granting of Credit to Green Firms

Value-Driven Bankers and the Granting of Credit to Green Firms 

Matti Keloharju

Aalto University

Abstract:  How do bankers treat green firms? Utilizing unique loan application and banker preference data from a mid-sized bank, we find that customer managers, serving as frontline bankers, provide more favorable recommendations for green firms, particularly when they hold green values. However, a minority of environmentally skeptical managers counteract this trend. They fake green interests when their recommendations bear no weight, and conversely, diminish their endorsements to green firms when they do hold significance. Additionally, brown loan officers, acting as superiors to the managers, strive to offset positive green firm evaluations by downgrading them.

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