Working Paper: CEPR ID: DP18446
Authors: Francesco Dercole; Alexander F. Wagner
Abstract: This study examines the stock price reactions of environmentally responsible stocks during the onset of the 2023 banking crisis, triggered by the collapse of Silicon Valley Bank (SVB). Our findings indicate that stocks poised to benefit from the shift to a low-carbon economy underperformed during the 2023 crisis. This suggests that investors anticipate a slowdown in climate tech development due to distress in the banking sector. Our results underscore the significance of considering not only the influence of the climate crisis on financial stability, but also the pivotal role that financial stability plays in ensuring a successful energy transition.
Keywords: Bank failures; ESG; Event study; Financial crisis
JEL Codes: G12; G30; Q57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| perceived probability of a financial crisis (G01) | stocks that benefit from a speedy and successful energy transition (L94) |
| climate change opportunity exposure (Q54) | cumulative returns during the avalanche period (C22) |
| financial stability (G28) | investor expectations regarding the feasibility and speed of the energy transition (Q47) |
| lower leverage (G19) | cumulative returns during the avalanche period (C22) |
| stocks that benefit from climate tech development (Q55) | cumulative returns during the avalanche period (C22) |