The impact of environmental risk on the UK banking sector
The impact of environmental risk on the UK banking sector
The aim of this paper is to examine the tensions that face the UK banking sector in assessing and managing credit risks associated with actual or potential environmental damage arising from the activities of borrowers. It was found that banks were more concerned with the reputational effects associated with lending to a polluter than with credit risk assessment. Concern exists with the potential legal risks arising from the application of the principle of joint and several liability by courts in cases involving environmental damage caused by borrowers. The paper concludes that further research is required on the role of (a) the supply chain in credit risk assessment and (b) partnership contracts between borrower, lender and environmental agencies.
1005-1016
McKenzie, George
743874f1-e18f-472c-bdd7-ae02dc81c2d3
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
2004
McKenzie, George
743874f1-e18f-472c-bdd7-ae02dc81c2d3
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
McKenzie, George and Wolfe, Simon
(2004)
The impact of environmental risk on the UK banking sector.
Applied Financial Economics, 14 (14), .
(doi:10.1080/0960310042000261880).
Abstract
The aim of this paper is to examine the tensions that face the UK banking sector in assessing and managing credit risks associated with actual or potential environmental damage arising from the activities of borrowers. It was found that banks were more concerned with the reputational effects associated with lending to a polluter than with credit risk assessment. Concern exists with the potential legal risks arising from the application of the principle of joint and several liability by courts in cases involving environmental damage caused by borrowers. The paper concludes that further research is required on the role of (a) the supply chain in credit risk assessment and (b) partnership contracts between borrower, lender and environmental agencies.
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Published date: 2004
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Local EPrints ID: 35960
URI: http://eprints.soton.ac.uk/id/eprint/35960
ISSN: 0960-3107
PURE UUID: bc70df81-2773-496b-92ad-fcd057196b3e
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Date deposited: 24 May 2006
Last modified: 16 Mar 2024 02:44
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Author:
George McKenzie
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