Journal article
The EU taxonomy and the syndicated loan market
- Abstract:
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The European Union (EU) Taxonomy on Sustainable Activities is one of the most far-reaching financial market regulations to combat climate change. Using international data from the syndicated loan market, we demonstrate that firms with larger EU Taxonomy-eligible revenue shares paid lower interest rates in the years before the formal introduction of the Taxonomy. Business revenue is Taxonomy-eligible if it originates from “transitional activities” that substantially contribute to climate change mitigation. A one-standard-deviation increase in firm revenue from transitional activities is associated with 5 basis points (bp) lower loan spreads (5% relative to the standard deviation). Effects are more pronounced for firms in countries with greater climate risk exposure and more stringent environmental policies, and when lending institutions have green preferences. The effects of transitional revenue do not simply reflect a borrower’s ESG ratings or broad exposure to climate risks and opportunities. Overall, our results indicate that financial markets already priced in some of the intended effects of the Taxonomy.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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- Files:
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(Preview, Version of record, pdf, 827.8KB, Terms of use)
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- Publisher copy:
- 10.1007/s10693-024-00441-x
Authors
- Publisher:
- Springer Nature
- Journal:
- Journal of Financial Services Research More from this journal
- Volume:
- 69
- Issue:
- 1
- Pages:
- 109–134
- Publication date:
- 2025-01-25
- Acceptance date:
- 2024-12-03
- DOI:
- EISSN:
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1573-0735
- ISSN:
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0920-8550
- Language:
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English
- Keywords:
- Pubs id:
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2080521
- Local pid:
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pubs:2080521
- Deposit date:
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2025-03-17
- ARK identifier:
Terms of use
- Copyright holder:
- Sautner et al
- Copyright date:
- 2025
- Rights statement:
- © 2025, The Author(s). This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.
- Licence:
- CC Attribution (CC BY)
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