SEF Seminar Calendar, Seminar
“Can firms run away from climate-change risk? Evidence from the pricing of bank loans” by Dr. Yiming Qian
Monday, 8 July 2019 | 11:00 - 12:30
1121, K. K. Leung Building
Speaker:
Dr. Yiming Qian
Associate Professor
Tippie College of Business
The University of Iowa
Abstract:
We examine how banks perceive and price the effects of climate change on corporate firms. We show that the risk of sea level rise (SLR) increases the spread for long-term loans of affected firms. This effect is stronger when it is harder for firms to relocate or otherwise diversify their SLR risk. Banks also adjust nonprice contractual terms and the loan syndicate structure to manage the risk. Further, we find that banks are subject to limited attention when it comes to this unconventional risk: the spread-risk sensitivity is higher if the lead bank has more experience about the risk and in times of heightened media attention. Finally, affected firms respond to the pricing of the risk by using less long-term debt. Research
