Climate risk and bank stability : international evidence

Anh-Tuan Le; Thao Phuong Tran; Anil V. Mishra

doi:10.1016/j.mulfin.2023.100824

Climate risk and bank stability : international evidence

Anh-Tuan Le, Thao Phuong Tran, Anil V. Mishra

Western Sydney University

Research output: Contribution to journal › Article › peer-review

Abstract

The paper studies the association between climate risk and bank stability. Using an international sample of 6433 commercial banks in 109 countries between 2005 and 2019, we illustrate that increased climate risk leads to decreased bank stability. These findings are robust to alternative bank stability measures and after controlling for endogeneity by an instrumental variable and system GMM approach. Further analysis shows that the negative impact of climate risk on bank stability is more pronounced in small banks and banks that have low capital. In addition, we also find better institutional governance, bank supervision, and regulations can eliminate the adverse impact of climate risk. Our results are neither determined by the effect of the financial crisis nor by the heterogeneity of different regions. Overall, our findings add a novel determinant of bank stability globally.

Original language	English
Article number	100824
Number of pages	22
Journal	Journal of Multinational Financial Management
Volume	70-71
DOIs	https://doi.org/10.1016/j.mulfin.2023.100824
Publication status	Published - Dec 2023

Open Access - Access Right Statement

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.mulfin.2023.100824

Cite this

@article{64842b132b9f4016ad4f2e98974bfb8b,

title = "Climate risk and bank stability : international evidence",

abstract = "The paper studies the association between climate risk and bank stability. Using an international sample of 6433 commercial banks in 109 countries between 2005 and 2019, we illustrate that increased climate risk leads to decreased bank stability. These findings are robust to alternative bank stability measures and after controlling for endogeneity by an instrumental variable and system GMM approach. Further analysis shows that the negative impact of climate risk on bank stability is more pronounced in small banks and banks that have low capital. In addition, we also find better institutional governance, bank supervision, and regulations can eliminate the adverse impact of climate risk. Our results are neither determined by the effect of the financial crisis nor by the heterogeneity of different regions. Overall, our findings add a novel determinant of bank stability globally.",

author = "Anh-Tuan Le and Tran, {Thao Phuong} and Mishra, {Anil V.}",

year = "2023",

month = dec,

doi = "10.1016/j.mulfin.2023.100824",

language = "English",

volume = "70-71",

journal = "Journal of Multinational Financial Management",

issn = "1042-444X",

publisher = "Elsevier",

}

TY - JOUR

T1 - Climate risk and bank stability : international evidence

AU - Le, Anh-Tuan

AU - Tran, Thao Phuong

AU - Mishra, Anil V.

PY - 2023/12

Y1 - 2023/12

N2 - The paper studies the association between climate risk and bank stability. Using an international sample of 6433 commercial banks in 109 countries between 2005 and 2019, we illustrate that increased climate risk leads to decreased bank stability. These findings are robust to alternative bank stability measures and after controlling for endogeneity by an instrumental variable and system GMM approach. Further analysis shows that the negative impact of climate risk on bank stability is more pronounced in small banks and banks that have low capital. In addition, we also find better institutional governance, bank supervision, and regulations can eliminate the adverse impact of climate risk. Our results are neither determined by the effect of the financial crisis nor by the heterogeneity of different regions. Overall, our findings add a novel determinant of bank stability globally.

AB - The paper studies the association between climate risk and bank stability. Using an international sample of 6433 commercial banks in 109 countries between 2005 and 2019, we illustrate that increased climate risk leads to decreased bank stability. These findings are robust to alternative bank stability measures and after controlling for endogeneity by an instrumental variable and system GMM approach. Further analysis shows that the negative impact of climate risk on bank stability is more pronounced in small banks and banks that have low capital. In addition, we also find better institutional governance, bank supervision, and regulations can eliminate the adverse impact of climate risk. Our results are neither determined by the effect of the financial crisis nor by the heterogeneity of different regions. Overall, our findings add a novel determinant of bank stability globally.

UR - https://hdl.handle.net/1959.7/uws:72809

U2 - 10.1016/j.mulfin.2023.100824

DO - 10.1016/j.mulfin.2023.100824

M3 - Article

SN - 1042-444X

VL - 70-71

JO - Journal of Multinational Financial Management

JF - Journal of Multinational Financial Management

M1 - 100824

ER -

Climate risk and bank stability : international evidence

Abstract

Open Access - Access Right Statement

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this