Abstract
Belief in the effects of climate change remains stubbornly regionally specific. This column discusses how banks assess environmental risks in syndicated loan markets in the US. The deregulation following US withdrawal from the Paris Agreement in 2017 prompted banks to reduce the environmental-risk sensitivity of their loan pricing in Republican states, while lenders charged higher rates to borrowers causing severe environmental damage only in states where climate denial is low. The price of environmental risk in bank lending, the authors suggest, is driven by local beliefs and regulatory enforcement practices.
Erten, Irem