Time: 13:30-15:00 on Friday, Mar.28, 2025

Location: Room 603, Starr Building

Topic: The ESG Divide: How Banks and Bondholders Differ in Financing Brown Firms

Speaker: Sergey Sarkisyan    The Ohio State University

Abstract: We study credit providers and costs of debt for firms with low ESG performance. First, we find that, while both banks and bondholders charge low-ESG borrowers a higher interest rate compared to high-ESG borrowers, the premium charged by banks is relatively lower. Second, while bondholders reduce the amount of financing when borrowers’ ESG performance deteriorates, banks keep the size of their loans unchanged or even increase loans issued to low-ESG borrowers. We provide evidence that the difference in creditors’ policies is driven by banks’ superior in- formation about how material borrowers’ low ESG performance is and by lenders’ different preferences regarding their borrowers’ ESG performance.

Bio: Sergey Sarkisyan is an Assistant Professor of Finance at the Fisher College of Business, The Ohio State University. He earned his Ph.D. in finance from Wharton School at the University of Pennsylvania in 2024. His research interests include financial intermediation, monetary policy, and payment technologies. His work has received R&R at JF and JFE.