The EU Taxonomy and the Syndicated Loan Market

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Jing YU

Topic: The EU Taxonomy and the Syndicated Loan Market

Speaker: Jing Yu, the University of Sydney

Venue: Hybrid - Both face to face and online Zoom

On campus | Face-to-face seminar in room CB08.02.002, Building 8, University of Technology Sydney, Australia (Map of campus)

Zoom | Click here to register (After registering, you will receive a confirmation email containing information on how to join the meeting, including an access link.)

Abstract: We provide first empirical evidence on the financial market effects of the EU Taxonomy for Sustainable Activities. Using international data from the syndicated loan market, we demonstrate that – in the past – firms with larger Taxonomy-aligned revenue shares paid lower interest rates. Business revenue is Taxonomy-aligned if it originates from “transitional activities” that substantially contribute to climate change mitigation. A one-standard-deviation increase in firm revenue from transitional activities is associated with six basis points lower loan spreads. Effects are more pronounced for firms in countries with greater climate risk exposure and more stringent environmental policies, and when lending institutions have green preferences. Our results indicate that financial markets already price in some of the intended effects of the EU Taxonomy.

The paper is also available here. 

Seminar protocols:

  • The seminar will run for 45 minutes, followed by a 15 minute Q&A session
  • There will be a moderator for each seminar event, who will facilitate communication and resolve any issues
  • Participants can raise their hand to ask questions during the presentation. The moderator will then alert the speaker at the appropriate time and either ask the questions raised or they can ask the question directly to the presenter

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Co-ordinator: Jing Xu

Enquiries: Jin Jo

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