Do Energy Efficient Firms Have Better Access to Finance?

Brutscher, Philipp-Bastian; Ravillard, Pauline; Semieniuk, Gregor

Abstract

Improving energy efficiency quickly is key to mitigating climate change and requires improvements implemented in firms. As these require upfront investments, good access to external finance is important. Theory suggests that information asymmetries may prevent lenders from including energy efficiency into their lending assessment, even though higher energy efficiency increases firm cost-competitiveness and its collateral value. Empirically, little is known about the impact of energy efficiency on access to external finance. For the first time, we examine empirically the effect of a firm’s higher energy efficiency on their ability to obtain loans in European Union countries by exploiting a unique firm-level dataset. We find that energy efficiency has no effect on the ability of a firm to obtain external financing compared to other indicators on the financial or operational health of the firm. The results reveal an unexploited potential for energy efficiency policy to signal when firms are energy efficient.

Citation

Brutscher, P.-B., Ravillard, P., & Semieniuk, G. (2021). Do Energy Efficient Firms Have Better Access to Finance?. The Energy Journal, 42(6), Article 3757. https://doi.org/10.5547/01956574.42.6.pbru

• Journal Article Type: Article
• Acceptance Date: Oct 1, 2020
• Publication Date: Sep 1, 2021
• Deposit Date: Jan 6, 2021
• Publicly Available Date: Jan 6, 2021
• Journal: The Energy Journal
• Print ISSN: 0195-6574
• Electronic ISSN: 1944-9089
• Publisher: International Association for Energy Economics
• Peer Reviewed: Peer Reviewed
• Volume: 42
• Issue: 6
• Article Number: 3757
• DOI: https://doi.org/10.5547/01956574.42.6.pbru