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Journal of Financial and Quantitative Analysis 2026

Can Lending Hierarchies Balance Bias? The Role of Personal Environmental Values in Credit to Green Firms

Di Bu1; Matti Keloharju2; Yin Liao1; Steven Ongena3

1 Macquarie University · 2 Aalto University School of BusinessCentre for Economic Policy Research (CEPR) Research Institute of Industrial Economics (IFN) · 3 University of ZurichSwiss Finance Institute, KU Leuven, NTNU Business School Centre for Economic Policy Research (CEPR)

open access

Abstract

How do bankers treat green firms? Using unique loan application and banker preference data from a mid-sized bank, we find that customer managers, serving as front-line bankers, give more favorable recommendations to green firms, especially when they hold green values themselves. However, a minority of environmentally skeptical loan officers, aware through internal training that customer managers generally have greener preferences, counter this by downgrading positive evaluations of green firms. Despite not knowing the customer manager’s identity, these officers use their discretion to mitigate what they perceive as green biases, demonstrating the significant moderating role of superiors within the bank’s hierarchy.

DOI
10.1017/s0022109025102561
Pages
1-33
Language
en
Sources
openalex crossref

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