Can Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies

Authors

Mattia Guerini, University of Brescia, Fondazione Eni Enrico Mattei (FEEM), GREDEG, CNRS, Université Côte d'Azur and Institute of Economics, Sant'Anna School of Advanced StudiesFollow
Giovanni Marin, Department of Economics, Society, Politics, University of Urbino Carlo Bo and SEEDSFollow
Francesco Vona, University of Milan, Department of Environmental Science and Policy, Fondazione Eni Enrico Mattei and OFCE Sciences-PoFollow

Date of This Version

12-1-2025

Abstract

We study how monetary policy shapes firm level carbon emissions. Our identification strategy exploits the European Central Bank’s July 2012 move to the zero lower bound as a plausibly exogenous easing of credit supply, combined with rich administrative and survey data on French manufacturing firms from 2000–2019. Using a difference-in-differences design with debt-to-asset ratios as exposure, we find that financially constrained firms cut emissions by about 9.4% more than unconstrained ones. This effect primarily stems from improvements in energy efficiency, lower carbon intensity of energy, and general productivity improvements associated with capital deepening that outweighed modest scale effects. Small and medium firms drive these results, while large and EU ETS regulated firms show no significant response. On average, emissions fell by 3.3% per year, summing up to 5.3 million tonnes of CO2 saved.

Recommended Citation

Guerini, Mattia; Marin, Giovanni; and Vona, Francesco, "Can Easing Financial Constraints Reduce Carbon Emissions? Evidence from a Large Sample of French Companies" (December 01, 2025). Fondazione Eni Enrico Mattei Working Papers. Paper 1489.
https://services.bepress.com/feem/paper1489