Working Paper: CEPR ID: DP15886
Authors: Ralph de Haas; Ralf Martin; Mirabelle Muuls; Helena Schweiger
Abstract: Using data on 10,776 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment and vehicles. In contrast, investment in measures to explicitly reduce emissions and other pollution is mainly determined by the quality of a firm's green management and less so by binding credit constraints. Data from the European Pollutant Release and Transfer Register reveal the environmental impact of these organizational constraints. In areas where more firms are credit constrained and weakly managed, industrial facilities systematically emit more CO2 and pollutants. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO2 emissions 4.5% and 2.3% above the levels that would have prevailed without such constraints. This is further corroborated by our finding that in localities where banks had to deleverage more due to the global financial crisis, carbon emissions by industrial facilities remained 5.6% higher a decade later.
Keywords: Credit Constraints; Energy Efficiency; Green Management; CO2 Emissions
JEL Codes: D22; L23; G32; L20; Q52; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Credit Constraints (E51) | CO2 Emissions (Q54) |
| Weak Green Management (Q53) | CO2 Emissions (Q54) |
| Global Financial Crisis (F65) | CO2 Emissions (Q54) |
| Credit Constraints (E51) | Green Investments (F64) |
| Weak Green Management (Q53) | Green Investments (F64) |
| Green Management (Q53) | Green Investments (F64) |