Gender Diversity in Bank Boardrooms and Green Lending: Evidence from Euro Area Credit Register Data

Abstract

Do female directors on banks’ boards influence lending decisions towards less polluting firms? By using granular credit register data matched with information on 539,928 firm-level greenhouse gas (GHG) emission intensities, we isolate credit supply and find that banks with more gender-diverse boards provide less credit to browner companies. This evidence is robust when we differentiate among types of GHG emissions and control for endogeneity concerns. In addition, we also show that female director-specific characteristics matter for lending behaviour to polluting firms as better-educated directors grant lower credit volumes to more polluting firms. Finally, we document that the “greening” effect of the female members in banks’ boardrooms is stronger in countries with more female climate-oriented politicians.