FAIRR Seminar - Mikhail Manonov (TBS, France)

Place : Sophia Antipolis Campus
Time : 10:30AM - 12:00PM 
Speaker : Mikhail Mamonov (TBS, France), joint with Hans Degryse, Bernardus van Doornik, Maxim Schepers, et Carola Theunisz

Abstract : We explore the impact of environmental policy restrictions on bank lending and its cross-sectional implications for the performance of borrowing firms. In April 2014, the Central Bank of Brazil introduced a socio-environmental policy (PRSA) designed to compel banks to reduce lending to highly polluting firms. To identify the effect, we take advantage of the staggered implementation of the PRSA in which eleven banking conglomerates were given nine months to comply, while all other banks were granted an additional six months before the PRSA came into effect. We merge data from the full corporate credit registry (SCR) to the Ministry of Environment’s registry of potentially polluting activities (CTF/APP), which covers 390,000 unique firms from 2011 to 2019. We also incorporate bank financial statements (COSIF), firm employment data (RAIS), and other relevant bank- and firm-level characteristics. First, we document that early-treated banks reduced lending to highly polluting firms immediately after the PRSA announcement, while later-treated banks only reacted after the policy was enacted. Second, we find that early-treated banks with high ex-ante loan exposures to polluting firms reduced their credit supply to a greater degree. Specifically, firms with high pollution potential face a credit contraction of about 20%, whereas firms with low pollution potential were unaffected by the policy shift. Third, later-treated banks cut their credit supply to highly polluting firms by about 30%. Fourth, highly polluting firms that had relationships with affected banks encountered a 31% slump of market sales and reduced their demand for labor over the first two years after the PRSA announcement. Overall, our findings show that banks and their corporate borrowers adapt to a tightening of climate-related regulation.

Biography : Mikhail Mamonov is an Assistant Professor of Finance (tenure track) at the Department of Economics and Finance at Toulouse Business School (TBS, France).
In October 2023, he received a Ph.D. degree in Economics from  CERGE-EI (a joint workplace of Charles University and the Czech Academy of Sciences, Czech Republic).

During 2021-2023, he was a visiting Ph.D. student at the Department of Banking and Finance at the University of Zurich (Switzerland), the Department of Accounting, Finance, and Insurance at KU Leuven (Belgium), and the Department of Economics at Princeton University (USA).

He is an applied economist focusing on how sanctions, wars, and other political distortions affect banks and their corporate borrowers. His specific interest is in how banks and firms adapt to these distortions once they become more frequent and thus anticipated.