WORKING PAPERS
Climate Risk and Credit Availability (with Emdad Islam)
[Doctoral Student Consortium - The FMA Annual Meeting 2019 (New Orleans), Ph.D. Session - The FIRN Annual Meeting 2019 (Byron Bay), Poster Session - AEA Annual Meeting 2020 (San Diego), EDHEC - The Finance of Climate Change 2019 (Paris), UZH Young Researcher Workshop on Climate Finance 2020 (Zurich), and The FMA Annual Meeting 2020 (Online).]
Abstract: We propose a novel climate risk measure that simultaneously accounts for location, seasonalities, and previous and current climates. A standard deviation increase in a bank's exposure to local climate risk leads to a decline of 5 to 14 percent in annual credit growth. Realizations of extreme disasters (the direct effect) and adaptation to climate change (the belief effect) drive the adverse effect of climate risk on credit availability. Our empirical evidence suggests that banks, ex-ante, act and adapt to avoid the actual or perceived adverse effects of climate change on small businesses, households, and large firms across their service regions.
Climate Risk and Credit Availability (with Emdad Islam)
[Doctoral Student Consortium - The FMA Annual Meeting 2019 (New Orleans), Ph.D. Session - The FIRN Annual Meeting 2019 (Byron Bay), Poster Session - AEA Annual Meeting 2020 (San Diego), EDHEC - The Finance of Climate Change 2019 (Paris), UZH Young Researcher Workshop on Climate Finance 2020 (Zurich), and The FMA Annual Meeting 2020 (Online).]
Abstract: We propose a novel climate risk measure that simultaneously accounts for location, seasonalities, and previous and current climates. A standard deviation increase in a bank's exposure to local climate risk leads to a decline of 5 to 14 percent in annual credit growth. Realizations of extreme disasters (the direct effect) and adaptation to climate change (the belief effect) drive the adverse effect of climate risk on credit availability. Our empirical evidence suggests that banks, ex-ante, act and adapt to avoid the actual or perceived adverse effects of climate change on small businesses, households, and large firms across their service regions.
