Do Natural Disasters Reduce Loans to the More CO₂-Emitting Sectors?

Round 1

Reviewer 1 Report (Previous Reviewer 1)

Do Natural Disasters Reallocate Reduce Loan Allocation to the CO2-Emitting Sectors?

The current paper examines the impact of major floods occurred in Turkey between 2005 and 2020 on lending and the allocation of loans between sectors depending on how polluting they are. The authors claim that the two major floods of 2015 and 2019 contributed to reallocating loans from the more polluting to the less polluting sectors. The authors also claim that the result is related to demand factors more than for reasons related to the supply of loans.

The topic is worth studying and relevant in the current context.

In general, the paper is straightforward, well-structured and written.

The background, the literature review and the description of the novelty are in general adequate. The econometric work seems well executed. Also, the authors included a relevant number of variables based on the literature.

However, the main conclusion seems strong as other factors driving the demand for loans in polluting industries could explain the decrease in demand for loans and not particularly the floods. Also, the dataset ends in 2020 so it is quite strong to infer that a flood from 2019 structurally shifts loans from polluting industries to non-polluting based on only one year of evidence.

Overall, I find the paper relevant and well executed, my reservations being related more to the tone of the conclusions.

English language is fine.

Author Response

Dear Referee,

Thanks for your insightful comments.

You stated: " a data set ending in 2020 seems a weak reed to support conclusions about the effect of floods in 2019"
We extended the dataset to the latest available data (2021- CO2 emission by sector relative to 2022 will be available on September 2024), and we estimated again the model. Some results change, more in line with your first round comments.

Thank you very much indeed and best regards. 

Reviewer 2 Report (Previous Reviewer 3)

I have read the article "Do Natural Disasters Reduce Loan Allocation to the CO2-Emitting Sectors?" (sustainability-2909940), which is interesting and for sure rather innovative in terms of country analysed and also research question.

Apart from some typos - especially, the one in the title ("Do Natural Disasters Reallocate Reduce Loan Allocation to the 2 CO2-Emitting Sectors?") -, the article is well written and engaging. However, I suggest to provide some more background information about some striking facts such as the increasing trend of CO2 emissions (per capita) in Turkey compared to the rest of the world (https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?locations=TR). As a reader, I would appreciate some more information about the local context, its risk perception/awareness and habits despite/because of the increasing environmental risks.

With specific regard to the rest of the paper, I think that it is well done and sufficiently interesting. 

Minor editing of English language required.

Author Response

Dear Referee,

Thanks for your helpful comments.

Related to: “I suggest to provide some more background information about some striking facts such as the increasing trend of CO2 emissions (per capita) in Turkey compared to the rest of the world”, we provide in Figure 1 comparisons of CO2 per capita emission in Turkey with the rest of the world and selected countries, and comments on main determinants of pollution.

In relation to the second comment (As a reader, I would appreciate some more information about the local context, its risk perception/awareness and habits despite/because of the increasing environmental risks), we provide additional information in the conclusions.

Thanks again and best regards.

Reviewer 3 Report (New Reviewer)

1. The authors may clarify in a more concrete way the main findings of their research.

2. The authors may conclude to certain policy suggestions for the improvement of green investments from the banking sector in Turkey.

Author Response

Dear Referee,

Thank you for your helpful comments.

We revised the main findings of the research in the introduction and the conclusions, and we discussed more extensively the policy implications in the concluding remarks. Specifically, we suggested that Turkey needs more and effective public policies to speed up the transition to a greener economy.

Thank you again and best regards.

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.

Round 1

Reviewer 1 Report

 Do Natural Disasters Reduce Loan Allocation to the CO2-Emitting Sectors?

This paper investigates the impact of major floods in Turkey on lending and the allocation of loans among polluting industries between 2007 and 2020. The study points to a significant change of behavior in bank lending after the flood from 2019, respectively more lending to non-polluting industries in relative terms comparative with more polluting industries.

The topic of the paper is interesting and relevant in the current global context.

In general, the paper is straightforward and well written, its proposed contribution to the literature being also well emphasized.

The econometric work seems well executed form a technical point of view.

However, the conclusion is quite strong - that the change in banking behavior is likely to be due to the increased awareness generated by floods about the effects of climate changes.

The paper uses a only limited number of control variables and there could be questions if whether a third factor was the driving force behind the change in behavior related to bank lending to various industries. The literature on bank lending could provide inspiration for more variables. Also, in general the literature review should be expanded and the results of the current research should be compared more explicitly with the results from other studies.

The limitations of the current study could be also mentioned more in detail. In addition expanding the conclusions and discussion parts would be useful.

English language is fine.

Author Response

Dear Referee,

There is attached the response to your comments. Thanks for your insightful comments. 

Author Response File: Author Response.pdf

Reviewer 2 Report

Please find attached the Review Report

Comments for author File: Comments.pdf

Author Response

Dear Referee,

There is attached the response to your comments. Thanks for your insightful comments. 

Author Response File: Author Response.pdf

Reviewer 3 Report

I have read the article "Do Natural Disasters Reduce Loan Allocation to the CO2-Emitting Sectors?" (sustainability-2763476) and I feel that this is an interesting read. 

My suggestions on how to improve tha paper are the following:

1. readers need some data/information on the floods (e.g., deaths, estimated economic loss etc.) in Turkey from 2009 to 2019, which are the object of the authors' analysis. Table A3 is therefore particularly relevant and I doubt that it is useful to keep it in the Appendix instead of moving it to the upper body (eventually, in a squeezed/reduced version);

2. is there no additional literature to be considered? In general, 22 references are for a paper very few;

3.  I would suggest to include some (tentative) reflections on how risks, but also greenwashing might have altered the lending behavior of banks from 2019 onwards. Can this be explained by means that lending to high-polluting agents is riskier? Or is perceived as "not green"? I think that some considerations on that - even if conclusive - might contribute to the research itself too.

Moderate editing of English language required.

Author Response

Dear Referee,

There is attached the response to your comments. Thanks for your insightful comments. 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The authors adequately addressed my concerns.

Reviewer 2 Report

Although the authors have significantly improved the earlier version I still believe that most of the previous comments are valid.