Lorenzo Gai

This study examines the financial and macroeconomic factors affecting biodiversity loss in 51 emerging markets using the number of threatened species in biodiversity ecosystems for the years 2018 and 2022. We find that bank branch expansion and private sector credit expansion are associated with higher biodiversity loss, while an increased number of bank depositors is associated with lower biodiversity loss. High inflation and low unemployment also increase biodiversity loss. The implication of the findings is that man-made activities in the financial sector and in the economy affect biodiversity loss in emerging market countries.

Are the determinants of entry into non-performing status the same as those governing its resolution? This paper addresses thisquestion by analysing the post-origination evolution of loans guaranteed by the Italian Central Guarantee Fund for SMEs. Usingadministrative data on more than 3 million guaranteed loans granted between 2019 and 2024, we model guaranteed exposures as athree-state process, distinguishing between performing loans, non-performing loans, and guarantee enforcement. Transition probabilitiesare estimated within a Bayesian probit framework that examines both entry into distress and the subsequent resolution ofdistressed loans through either recovery or enforcement. We find that they are not: the determinants of entry into non-performingstatus differ from those governing its subsequent resolution into recovery or enforcement. Firm characteristics, loan purpose, guaranteestructure, sector and geographical location play a key role in explaining the transition into non-performing status, while theprobability of enforcement versus recovery is strongly influenced by the time spent in distress and by the nature of the guaranteedexposure. These results show that the effects of public guarantee schemes extend beyond credit access to the entire lifecycle ofcredit risk, and that their evaluation should distinguish between deterioration, recovery, and final loss realization — a distinctionrelevant for the design, targeting, and monitoring of public guarantee programmes.

This study examines the financial and macroeconomic factors affecting biodiversity loss in 51 emerging markets using the number of threatened species in biodiversity ecosystems for the years 2018 and 2022. We find that bank branch expansion and private sector credit expansion are associated with higher biodiversity loss, while financial inclusion in terms of increased number of bank depositors is associated with lower biodiversity loss. High inflation and low unemployment also increase biodiversity loss. The implication of the findings is that man-made activities in the financial sector and in the economy affect biodiversity loss in emerging market countries.

The rapid and alarming decline of biodiversity poses significant risks to businesses and financial institutions that rely on natural resources derived from plants, animals, and microorganisms. Using an international sample of syndicated loans, we find that firms with greater biodiversity impact and dependency face higher interest rate spreads on bank loans. We examine whether eternal stakeholder pressure and the institutional environment influence how lenders price firms’ biodiversity risks. Biodiversity dependency risk is priced more strongly in countries with stronger environmental institutions and governance quality. We also show that banks adhering to sustainability frameworks such as the Equator Principles apply stricter loan pricing to biodiversity-exposed firms, while only concrete biodiversity mitigation actions by borrowers partially reduce the associated loan spreads. Our results are robust to an instrumental variable approach, alternative measures of biodiversity risk and controlling for firm-level climate risk exposure and Environmental, social, and governance (ESG) performance.

This study examines the market reaction to the approval of the Nature Restoration Law, a key component of the EU Biodiversity Strategy, and its implications for biodiversity-related financial risks. Using an event study methodology, we analyze the equity price movements of companies listed in the MSCI Europe Index that are equally weighted in relation to the announcement. We select the RepRisk Due Diligence Score, focusing on incidents linked to landscapes, ecosystems, and biodiversity, as a measure of biodiversity risk. At first, it seems that companies with a high RepRisk Due Diligence Score show limited or positive abnormal returns, suggesting that biodiversity risks are already priced for companies that have experienced incidents linked to this issue. Conversely, firms with lower biodiversity risk exposure see null or negative impacts, reflecting heightened investor concerns about new environmental regulations or compliance costs. Although the event does not have a systemic impact on European companies in the index, it seems that some sectors are affected when analyzed using parametric and non-parametric distributions.

This study investigates the factors influencing the success of sustainability-oriented equity crowdfunding campaigns by analyzing a dataset of 771 campaigns from Italian platforms between 2014 and 2021. The findings indicate that while projects with a sustainability focus tend to achieve better outcomes, their success is contingent on variables such as the economic sector of the proposing company and investor concerns regarding misleading claims about environmental, social, and governance practices. Notably, professional investors play a critical role in early-stage financing, initiating information cascades that drive broader investor participation. Furthermore, the COVID-19 crisis appears to have heightened investor interest in sustainability, further solidifying equity crowdfunding as a viable financing tool for ventures with environmental and social objectives. By identifying the key factors that drive the success of sustainability-oriented campaigns, this study offers valuable insights for entrepreneurs, investors, and policymakers seeking to enhance the role of alternative finance in promoting sustainable innovation.

With a sample of 4,065 bonds issued by 63 banks from 12 euro area countries during 2013–2017, this study investigates how introducing bail‐in regulation has influenced bond yields in secondary markets, by distinguishing between non‐bail‐inable and different classes of bail‐inable bonds. The bail‐in risk premium does not follow the hierarchy of risk; it is stronger for less risky bonds. The effect on the spread between senior unsecured and non‐bail‐inable bonds is much higher than for subordinated bonds. Regarding subordinated bonds, the impact is higher for securities excluded from regulatory capital than for those included.