Gas, Guns, and Governments: Financial Costs of Anti-ESG Policies

ArXiv ID: ssrn-4123366 “View on arXiv”

Authors: Unknown

Abstract

We study how restricting intermediary contracting over ESG policies distorts financial market outcomes. In 2021 Texas prohibited municipalities from hiring bank

Keywords: ESG policies, intermediary contracting, financial market distortion, regulatory impact, municipal finance, Credit

Complexity vs Empirical Score

• Math Complexity: 2.5/10
• Empirical Rigor: 8.5/10
• Quadrant: Street Traders
• Why: The paper’s primary analysis relies on standard event-study regressions and difference-in-differences methodology applied to municipal bond data, requiring significant data processing and implementation, but the mathematical depth is limited to basic econometric models.

  flowchart TD
    A["Research Question<br>Impact of ESG restrictions<br>on municipal financing"] --> B["Methodology<br>Event Study + Difference-in-Differences"]
    B --> C["Data Sources"]
    C --> D["Municipal Bond Data"]
    C --> E["Bank Contracting Data"]
    C --> F["Texas Policy 2021"]
    D & E & F --> G["Computational Process<br>Estimate spread changes<br>& loan pricing impacts"]
    G --> H["Key Findings"]
    H --> I["+8-10 bps spread increase<br>in Texas municipal bonds"]
    H --> J["Higher borrowing costs<br>for municipalities"]
    H --> K["Market distortion<br>from ESG restrictions"]