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The impact of climate change on credit risk of rural financial institutions: A threshold effect based on agricultural insurance

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  • Ma, Qianting
  • Zhou, Yueshu
  • Wang, Jiaji

Abstract

Climate change affects the stability of the rural financial system. This paper uses the multi-agent model to deduce the impact mechanism of climate change on the credit risk of rural financial institutions, and conducts a series of empirical tests. The results show that: (i) climate change has an adverse impact on the credit risk of rural financial institutions. (ii) agricultural insurance shows a threshold effect in the process of climate change affecting the credit risk of rural financial institutions. (iii) high-level agricultural insurance can mitigate the adverse impact of climate change on the credit risk of rural financial institutions. It reveals that the agricultural insurance is a crucial policy for taking precautions.

Suggested Citation

  • Ma, Qianting & Zhou, Yueshu & Wang, Jiaji, 2024. "The impact of climate change on credit risk of rural financial institutions: A threshold effect based on agricultural insurance," The North American Journal of Economics and Finance, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:ecofin:v:71:y:2024:i:c:s106294082400010x
    DOI: 10.1016/j.najef.2024.102086
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    2. Liu, Bei & Ren, Baoping & Jin, Fei, 2025. "Does climate risk affect the ease of access to credit for farmers? Evidence from CHFS," International Review of Economics & Finance, Elsevier, vol. 97(C).

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    More about this item

    Keywords

    Rural financial institutions; Credit risk; Climate change; Agricultural insurance; Threshold effect;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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