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The spillover effect of customer extreme climate risk: Evidence from supplier trade credit

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  • Huang, Zhen
  • Dou, Tianyu

Abstract

This study examines the spillover effect of customer extreme climate risk on suppliers’ trade credit provision to their customers, and the moderating effects of customer climate sensitivity and customer green investment. We find that suppliers decrease trade credit provision as customer extreme climate risk increases. This adverse impact is stronger when firms have higher customer climate sensitivity and lower customer green investment. The negative effect continues to hold under several robustness tests, such as instrumental variable regression and propensity score matching. We further find that the influencing mechanism through which customer extreme climate risk impacts supplier trade credit is to increase the likelihood of customer credit risk. Additionally, the effect of customer extreme climate risk on suppliers’ trade credit provision is more significant when customers are non-state-owned or have a low market position. Our findings highlight the importance of customer extreme climate risk and offer valuable insights for suppliers to refine their business strategies in the context of supply chain risk spillover.

Suggested Citation

  • Huang, Zhen & Dou, Tianyu, 2026. "The spillover effect of customer extreme climate risk: Evidence from supplier trade credit," The North American Journal of Economics and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:ecofin:v:81:y:2026:i:c:s1062940825001937
    DOI: 10.1016/j.najef.2025.102553
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