Debt overhang and green investments - the role of banks in climate-friendly management of emission-intensive fixed assets
The collaborative project “Debt Overhang and Green Investments” (OVERHANG) aims to investigate the role of banks in the climate-friendly management of emission-intensive fixed assets. This will identify policy-relevant insights on financial regulation, government-controlled lending and financial stability, as well as raise awareness among indebted stakeholders.
Based on the concept of the “underinvestment problem” from corporate finance theory, the impact of bank capital regulation on investment strategies is modeled. Empirical analyses quantify the key mechanisms and identify causal relationships between banks and borrowers. The joint project consists of three subprojects.