Differentiated green loans

Scaling up home energy retrofits requires that associated loans be priced efficiently. Using a unique dataset of posted loan prices scraped from online simulators made available by French credit institutions, we examine the differentiation interest rates in relation to project risk. Crucially, our data are immune sorting bias based on borrower characteristics. We find greener, arguably less risky, automobile projects carry lower rates, but greener do not. On other hand, conventional automobiles than retrofits, despite similar Our results robust range robustness checks, including placebo tests. They together suggest lenders use underlying assets screen borrower's unobserved willingness pay, which can cause under-investment retrofits. thereby point new form efficiency gap. This has important policy implications it explain low uptake zero-interest green programs.