Gas, Guns, and Governments: Financial Costs of Anti-ESG Policies

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Ivan T. Ivanov (Federal Reserve Bank of Chicago)

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IWH, conference room and via Zoom

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Ivan T. Ivanov is a Senior Economist in the Research Division of the Federal Reserve Bank of Chicago. His work centers on the importance of banks and shadow banks for the financing of SMEs and government entities. He has recently examined the effects of carbon pricing policy, ESG policies, and anti-ESG regulation on the capital acquisition process as well as the impact of monetary policy and disclosure regulation on the municipal debt market. His research interests are Financial intermediation & banking, public finance, corporate finance and climate finance.

We study how regulation limiting ESG policies distorts financial market outcomes. In 2021 Texas enacted laws that prohibit municipalities from contracting with banks with certain ESG policies, leading to the exit of five of the largest municipal bond underwriters from the state. Issuers previously reliant on these underwriters face higher uncertainty and borrowing costs since the enactment of the laws. These effects are consistent with deterioration in underwriter competition as issuers face fewer potential underwriters. Texas issuers will incur $300-$500 million in additional interest on the $31.8 billion borrowed during the first eight months following enactment. Read more ...

To join the lecture via ZOOM, please contact Afroza Alam.