Abstract

Banks can exert considerable economic influence on corporate commitment in CSR and provide valuable support for the sustainability agendas of governments and institutions. We present a review of the existing literature investigating whether banks adjust interest rates and other loan contract features to account for the ESG performance (or risk) of their borrowers. The studies reviewed provide several conflicting results. Furthermore, these studies are mostly focused on large listed companies, while the universe of small and medium-sized companies is almost completely neglected. We highlight several research gaps and outline some insights for future research.