East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
See page
Financial Stability
Financial Systems: The Anatomy of the Market Economy How the financial system is constructed, how it works, how to keep it fit and what good a bit of chocolate can do. Dossier In…
See page
Privacy
Data Protection Policy We take the protection of your personal data very seriously and treat your personal data with confidentiality and in compliance with the provisions of law…
See page
Research Clusters
Three Research Clusters Each IWH research group is assigned to a topic-oriented research cluster. The clusters are not separate organisational units, but rather bundle the…
See page
IWH EXplore
IWH EXplore Competitive Funding for Research Projects with External Involvement at IWH IWH EXplore gives scientists the opportunity to acquire supplemental funding, in addition to…
See page
Visualization
Visualization Below you can see a first application of the data visualization created using the CompNet Reduced Dataset. On the top of the graphs, there is a filter called “select…
See page
Visualization
Visualization Below you can see a first application of the data visualization created using the CompNet Reduced Dataset. On the top of the graphs, there is a filter called “select…
See page
How to Apply
How to Apply Requirements All applications must be submitted via the online portal, which will become accessible upon the opening of the Call for Applications. The following…
See page
13 CompNet Annual Conference
13th CompNet Annual Conference The 13th Annual Conference in Valletta, hosted by the Central Bank of Malta, was a resounding success. We extend our heartfelt thanks to everyone…
See page
Carbon Transition Risk and Corporate Loan Securitization
Isabella Müller, Huyen Nguyen, Trang Nguyen
Journal of Financial Intermediation,
Vol. 63 (July),
2025
Abstract
We examine how banks manage carbon transition risk by selling loans given to polluting borrowers to less regulated shadow banks in securitization markets. Exploiting the election of Donald Trump as an exogenous shock that reduces carbon transition risk, we find that banks engage in regulatory arbitrage and use brown loan securitization to manage their exposure to carbon transition risk. Banks are more likely to securitize brown loans when carbon transition risk is high but keep these loans on their balance sheets when the risk is reduced. In addition, securitization enables banks to offer lower interest rates to polluting borrowers but does not affect the supply of green loans. Our findings are more pronounced among banks with low levels of capitalization, domestic banks, and banks that do not display green lending preferences. We discuss how securitization can weaken the effectiveness of bank climate policies.
Read article
