As debates mount in the U.S. over how best to regulate the financial sector to address climate change, the potential harm from banking sector exposures to climate change has attracted considerable attention, while the potential benefits of equity markets seem largely ignored. In what follows, I discuss why those debating over how to regulate the financial sector to address climate change should acknowledge two facts. First, debt, especially bank lending, plays a less important role in U.S. nonfinancial corporate funding than equity. Second, equity funding, generally plays a more important role in encouraging innovation, including green innovation, or “greenovation”, than debt.
Equity Financing and the Future of Greenovation
Equity Financing and the Future of…
Equity Financing and the Future of Greenovation
As debates mount in the U.S. over how best to regulate the financial sector to address climate change, the potential harm from banking sector exposures to climate change has attracted considerable attention, while the potential benefits of equity markets seem largely ignored. In what follows, I discuss why those debating over how to regulate the financial sector to address climate change should acknowledge two facts. First, debt, especially bank lending, plays a less important role in U.S. nonfinancial corporate funding than equity. Second, equity funding, generally plays a more important role in encouraging innovation, including green innovation, or “greenovation”, than debt.