We study the impact of carbon pricing on household finance using European microdata on loans for internal combustion engine vehicles. Exploiting cross-country variation in the same car models with a difference-in-differences design, we find that banks respond to Germany's carbon price announcement by raising interest rates by 0.5 percentage points, with larger increases for loans on fuel-intensive vehicles and for longer maturities. Banks also shorten loan maturity, reduce amounts, and shift to linear repayments, while households choose more fuel-efficient new cars. Captive banks respond more strongly than commercial banks. Collateral and default risk channels jointly explain these adjustments, highlighting household finance as a key transmission channel of climate policy.

The junior research group PECan at Humboldt-Universität zu Berlin invites applications for a position as     Student Assistant (40 hours per month) (m/f/d). The successful candidate w...

The conference season has begun - and PECan is ready to mingle! We had a great start at the Financial Regulation – Going Green workshop hosted by IWH in Halle and   20th Doctorissimes at the ...

There is mixed evidence about the pricing of climate transition risk on financial markets. I contribute to this debate methodologically by measuring f…

The transition to a renewable heating system poses extraordinary policy challenges to societies in Europe and beyond. Many buildings are heated decent...

The United States will be one of only four countries outside the Paris Agreement, which is designed to reduce global greenhouse gas emissions.

The climate transition poses significant risks for companies, financial institutions, and investors. However, measuring these risks remains a challenge, as existing methods often yield inconsistent re...

Institutions make a difference: assessing the predictors of climate policy stringency using machine learning, von Dulong, Angelika, Hagen, Achim