"Success and Failure of a Zero-Interest Green Loan program : Evidence from France"
Ilya Eryzhenskiy, Louis-Gaëtan Giraudet, Mariona Segú

Abstract : Zero-interest green loan programs (ZIGL) are gaining traction to address the tremendous
financing needs implied by net-zero emission targets. We provide the first evaluation
of such a program, the Éco-Prêt à Taux Zéro, introduced in France in 2009 to encourage
home energy retrofits. Using an event-study design applied to a panel survey of 10,000
households, we find evidence that the program had a substantial, yet short-lived, effect.
Eligibility to the program increased investment by 20-22% on the extensive margin
and 2-3% on the intensive one, thereby generating 3% electricity savings. The effects
are however limited to the first two years, after which they turn non-significant. They
are primarily driven by low-income homeowners, suggesting the program effectively alleviates
credit constraints. These results are robust to a range of robustness checks,
including placebo regressions and propensity score weighting. They lead to leverage estimates
in the 1.3-1.7 range in the ‘successful’ period and below 1 thereafter. Using
additional banking data to investigate the post-2011 failure, we find suggestive evidence
that banks exploited prospective borrowers’ incomplete information to sell them their
own loan products in lieu of a ZIGL.