Green Loans: From Effects to Advantages

Abstract

By conducting a systematic literature review, this study examines the opportunities and threats and thus the economic implications of green loans from banks perspective. The results show a variety of heterogeneous effects of granting green loans (GL) in several areas, as market valuation, lending process, risk or profit. From a purely numerical perspective, we find more opportunities than threats, suggesting banks should provide GL. In this context, reductions in risks and nonperforming loans as well as increases in competitiveness and profits, which are contrasted in particular by increased costs, are specifically notable. However, as theoretical opportunities do not necessarily transform into real benefits, we subsequently use the dynamic capabilities framework to elaborate approaches that will enable banks to achieve long‐term competitive advantages through GL.