Dealing with Carbon Risk and the Cost of Debt: Evidence from the European Market
International Journal of Financial Studies, 2020, 8, 61; doi:10.3390/ijfs8040061
Posted: 10 Dec 2020
Date Written: October 15, 2020
The ever-increasing attention towards climate change has led to investigate the economic and financial impact of environmental risk. In this scenario, we aimed at investigating the relationship between a specific component of environmental risk, namely the so-called carbon risk, and the cost of debt. This research is motivated by the fact that few studies have focused on the aforementioned relationship. We fill this gap by using a sample of companies listed on the Eurostoxx 600 Index. Our results evidence a positive relationship between carbon risk and cost of debt, providing a relevant contribution to the scarce existing literature on this topic.
Keywords: Environmental Finance, Carbon Risk, Cost of Debt, European Financial Market
JEL Classification: G32, M14
Suggested Citation: Suggested Citation