This paper examines the relationship between the availability of bank credit and companies' decisions to invest in sustainable technologies. The study is carried out on data from Italian companies for the period 2015-19 and it applies textual analysis to the notes to their financial statements to identify sustainable investments made by those companies.
We show that an increase in banks' credit supply determines an increase in firms' propensity to invest in sustainable technologies, but only when such investments are also supported by public subsidies. The effect is driven by larger and more liquid companies, presumably due to the greater amount of financial resources required by this type of investment.
