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September 20, 2022

Climate policy and lending: are banks racing to the bottom?

We came across an interesting study of cross-border loans. Academics at Universitat Zurich found a correlation between domestic climate policies and banks’ lending activity to clients abroad. When the former is more stringent than that of a client’s country, the latter grows.

“Used in this way as a regulatory arbitrage tool, cross-border lending can reduce the effectiveness of climate policies if global coordination is not enforced,” say the authors.

The findings of the 2021 study are summarised in a short blog post that also shows some interesting charts. Worth a read.

Read the report

A service from the Financial Times