Working Papers and Work in Progress

Financial Constraints and Emission Intensity,  Single author (Draft available upon request)

"This paper investigates the impact of tighter financial constraints on firms' emission intensity using an internal capital market perspective. Winner-picking incentives can lead to reduced funding for marginal projects within the firm. When clean projects are at the margin this increases emission intensity. I show that, for European firms in emission-intensive sectors, dirtier subsidiaries are more profitable. Exploiting the EBA Capital Exercise in 2011 as a shock to bank credit in a difference-in-difference (DiD) setting, I show that treated firms engage in winner-picking and their clean subsidiaries shrink. But winner-picking is not the only adjustment mechanism if funding access is linked to environmental performance. In this case, firms can shift to cleaner projects to relax financial constraints reducing emission intensity. This mechanism I call Constraint-minimization. I model the trade-off between winner-picking and constraint-minimization in a theoretical framework. Finally, I exploit banks' sustainable commitments in a staggered DiD setting, to show that, when credit constraints are related to environmental performance, firms engage in constraint-minimization. The impact of financial constraints on emission intensity therefore depends on the nature of the constraint and firms' internal funding allocation."

Awarded the 2023 FIR-PRI Finance & Sustainability Research Grant  ➡️  Here is a link to a short video presentation of this project

Presented at (and scheduled*): IWH-DPE Seminar Series, Financial Regulation - Going Green workshop 2023, FEBS 2023, 1st Conference on Sustainable Banking & Finance CSBF 2023, EFIC 2023, EEA 2023, Norges Bank Workshop: "Women in Central Banking", ASSA* 2024.

Climate Change-Related Regulatory Risks and Bank Lending, with Isabella Mueller  (R&R at the Journal of International Economics)

ECB Working Paper N.2670 (2022), Latest version available upon request. 

"We analyze how firms' climate change-related regulatory risks affect banks' lending. Exploiting the Paris Agreement in a difference-in-differences setting, we find that effects depend on how borrowers will be affected by regulation as well as the stringency of the existing regulatory environment where firms are located. Firms that benefit from regulation receive more credit only if located in more stringent regulatory environments. Conversely, firms hurt by regulation receive more credit if located in less stringent environments or if linked to banks with a portfolio tilted toward lending to negatively impacted firms. "

Awarded the 2021 Lamfalussy Fellowship by the ECB

Presented at: IWH-DPE seminar series, 52nd Annual Conference of the Money, Macro and Finance Society, IFABS 2021 Oxford Conference, Rare Voices in Economics Conference, E-Axes Conference on Steering Financial Markets in the Sustainable Transition, CREDIT 2021, Annual Meeting of the VfS 2021, 27th Annual Meeting of the DGF, Workshop on Sustainable Banking, 10th Workshop on Banks and Financial Markets, CompNet ProdTalk Ep.13, AFA PhD Poster Session 2022, 2022 Swiss Winter Conference on Financial Intermediation, Annual event of finance research letters 2022 CEMLA Conference, 26th Spring Meeting of Young Economists, 11th International Conference of the FEBS, 8th Conference on Financial Intermediation of the Bank of Portugal, EEA 2022 and IMF Macrofinancial Seminar.

The European Banking Union and its directives: Staggered implementation of the new regulatory framework, with Thomas Krause, Lena Tonzer and Cristina Zgherea    (Under Revision)


Completing the European Banking Union: Capital cost consequences for credit providers and corporate borrowers, with Michael Koetter, Thomas Krause and Lena Tonzer, European Economic Review, Volume 148, September 2022, 104229

"The bank recovery and resolution directive (BRRD) regulates the bail-in hierarchy to resolve distressed banks in the European Union (EU). Using the staggered BRRD implementation across 15 member states, we identify banks’ capital cost responses and subsequent pass-through to borrowers towards surprise elements due to national transposition details. Average bank capital costs increase heterogeneously across countries with strongest funding cost hikes observed for banks located in GIIPS and non-EMU countries. Only banks in core E(M)U countries that exhibit higher funding costs increase credit spreads for corporate borrowers and contract credit supply. Tighter credit conditions are only passed on to more levered and less profitable firms. On balance, the national implementation of BRRD appears to have strengthened financial system resilience without a pervasive hike in borrowing costs."

Presented at: St. Andrews CRBF, EEA Annual Congress 2021, BIS/Deutsche Bundesbank/CEPR conference on “Evaluating financial regulation”, 2021 IADI Biennial Research Conference, Scottish Economic Society Annual Conference, 37th International Conference of AFFI, IBEFA summer meetings, 37th Symposium on Money, Banking and Finance, IWH-DPE seminar, Goethe University Finance seminar series, and the University of Zürich  

Other Work

Banking in the age of climate risks, with Huyen Nguyen, Book chapter, Encyclopedia of Monetary Policy, Financial Markets and Banking, Elsevier, forthcoming 

Climate Change-Related Regulatory Risks and Bank Lending, with Isabella Mueller, Suerf Policy Brief, No 387 - 2022.

Capital Markets Union: Database of Directives and Regulations, with Moritz Emlein, Lena Tonzer and Cristina Zgherea, IWH Technical Reports 02/2022.

Completion of the European Banking Union: Transposition Dates of the BRRD, with Michael Koetter, Thomas Krause and Lena Tonzer, IWH Technical Reports 02/2021.