That long, trusting relationship with your bank might actually be the thing stopping your company from going green.
April 3, 2026
Original Paper
Relationship Banking and Corporate Green Investments
SSRN · 6441823
The Takeaway
We usually think 'relationship banking' is good for growth, but when it comes to the environment, it is often a trap. Banks that know their clients too well are less likely to fund the radical changes needed for pollution prevention, preferring the old, 'safe' way of doing things.
From the abstract
This paper examines how relationship banking shapes firms' environmental investment decisions. Combining plant-level data on green investments with bank-firm relationship records for French manufacturers, we exploit the 2016 French floods as an exogenous shock to environmental awareness. Our difference-indifferences estimates show that long-term banking ties reduce the likelihood of investing in pollution prevention when firms are more dependent on their main lenders. This pattern reflects the t