Banking sustainability in a large emerging economy: Focus on Brazilian banks
This study investigates the exposure of Brazilian banks to sectors with a higher sensitivity to climate-related risks. For this purpose, by aligning the novel Sectoral Environmental Risk Index with the International Finance Corporation’s methodology, this research empirically analyzes more than 90 %...
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| Published in: | Journal of economics and business Vol. 132; p. 106207 |
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| Main Authors: | , , |
| Format: | Journal Article |
| Language: | English |
| Published: |
Elsevier Inc
01-11-2024
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| Subjects: | |
| Online Access: | Get full text |
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| Summary: | This study investigates the exposure of Brazilian banks to sectors with a higher sensitivity to climate-related risks. For this purpose, by aligning the novel Sectoral Environmental Risk Index with the International Finance Corporation’s methodology, this research empirically analyzes more than 90 % of Brazilian banks’ credit data. The main objective is to determine whether Brazilian banks expand their portfolios toward environmentally friendly sectors. Based on the findings, there is a positive association between growth credit and portfolios in such sectors, with a persistent effect over time. The results also provide valuable insights for policymakers and stakeholders aiming to foster sustainable finance practices by challenging the access to credit for polluting economic sectors.
•Developed a new index (SERI) to measure the environmental impact of a bank's credit portfolio.•Conducted a panel data analysis of Brazilian banks to examine the effect of credit growth rate on SERI.•Findings indicate that as banks in Brazil issue more loans, their loan portfolios become greener.•Increased environmental pressure encourages banks to maintain greener credit portfolios. |
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| ISSN: | 0148-6195 |
| DOI: | 10.1016/j.jeconbus.2024.106207 |