Physical climate change risk priced into corporate loans? Yes.
banks get the price right? Probably not.
Check the summary of our paper, "The Rising Tide Lifts Some Interest Rates," with @RCorrea_econ , @ChrisHerpfer , and Ugur Lel, which is now published in @JofFinance !
Overreaction ultimately changes real decisions.
Bank dependent firms show behavior consistent with preparation for getting cut off from loans in the future:
Investment/assets: -0.85 percentage points
Cash/liabilities: +7.23 points
Open access at https://t.co/gvpepuBSQF
Financial Management article "Diagnostics for asset pricing models" by Ai He (@UofSC) and Guofu Zhou (@WUSTL) is now available in Early View https://t.co/8ddVfUEvRI
#Finance
Great inaugural @TerryCollege football & finance conference ends with UGA beating South Carolina - two wins for the dawgs. Big thanks to @malcolmwardlaw for setting this up!
New working paper with Ai He, @ChrisHerpfer, and Ugur Lel where we test whether banks are pricing climate risks in corporate loans. Comments welcome. #EconTwitter