Research Interests
Empirical Financial Intermediation, Payments, Banking, Corporate Finance, Sustainability
Working Papers
We analyze the effect of a major central bank digital currency (CBDC) – the digital euro – on the payment industry. Stock prices of U.S. payment firms decrease, while stock prices of European payment firms increase in response to positive announcements on the digital euro. Bank stocks do not react. We estimate a loss in market capitalization of USD 127 billion for U.S. payment firms, compared to a gain of USD 23 billion for European payment firms. Our results emphasize the medium-of-exchange function of CBDCs and point to a novel geopolitical dimension of CBDCs: enhanced autonomy in payments.
R&R Journal of Finance
Climate Transition Risks of Banks: Evidence from Syndicated Loan Books
with Zacharias Sautner, Sascha Steffen, Carola Theunisz
We measure the exposure to climate transition risks of U.S. banks’ syndicated loan books. Constructed from the carbon footprint of bank loan borrowers, the measure correlates with banks’ return sensitivities to stranded asset values. Banks' exposures decline over time, driven mainly by a shift of credit toward low-emitters. Banks with growing transition risk exposures lobby to forestall future regulatory actions that would impose stricter climate policies. High-exposure banks disclose less on climate risks in 10-K filings but provide more information when challenged during earnings calls. Overall, banks’ actions reflect limited decarbonization, incomplete disclosures, and resistance to stronger climate regulations.
Work in Progress
Corporate Sustainability-Linked Bonds
I study corporate sustainability-linked bonds (SLBs), an innovative but controversial financial instrument that links economic outcomes to borrowers’ future ESG performance. Despite the rapid growth of the SLB market over the past years, I find no evidence that issuing SLBs instead of conventional bonds has tangible financial benefits. I show that there is no significant stock market reaction to announcements of SLB transactions, casting doubt on the value of SLBs as signaling devices. I also analyze the new issue pricing of SLBs but find no significant pricing difference relative to conventional bonds. Overall, my analyses raise questions regarding the rationale for corporates to raise financing in the form of SLBs.
Frankfurt School of Finance & Management
Finance Department
Adickesallee 32-34 60322 Frankfurt am Main (Germany)
f.martini@fs.de