Does climate legislation matter for bank lending? Evidence from MENA countries

Using data on MENA country-banks, the paper assesses the impact of climate legislation on bank lending. Exploiting the staggered timing of the implementation of such laws across countries, the evidence shows that such legislations lower lending by 5%. The impact manifests more starkly for Islamic banks as compared with their conventional counterparts. Banks increase investment to compensate for the revenue loss, although there was no discernible impact on their deposits.