We explore whether the actions of one regulator can affect the efficacy of another regulator. We investigate this idea in the context of environmental enforcement, which is a primary mechanism to combat industrial pollution and climate change. Specifically, we examine whether bank regulatory oversight affects the ability of environmental enforcement to reduce industrial emissions. We predict that bank regulatory oversight can constrain the availability of bank loans, hindering firms' ability to obtain financing for greener technologies and thus mitigating the efficacy of environmental enforcement.

Increased corporation regulation in recent decades has raised the likelihood of regulatory oversight spillovers-the extent to which one agency's interactions with a regulated firm affects firm behaviors under the purview of another agency. We study how such spillovers can affect the mission of a specific regulator-the tax authority-using a measure of firm-specific exposure to fragmented regulation.