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Ark amidst floods: Evidence from personal credit at a Chinese bank

Author

Listed:
  • Chen, Sichong
  • Xu, Qiyuan
  • Zeng, Jingjing
  • Zhao, Yunfeng

Abstract

This paper investigates the impact of climate risks on banking, focusing on shifts in creditworthiness and the provision of personal credit in response to flood events. By combining unique branch-level personal lending data from a Chinese mega commercial bank with records of floods that triggered emergency interventions, we provide compelling evidence of increased delinquency rates attributable to flood-related shocks. However, bank branches located in regions with prior exposure to such events demonstrate adaptive resilience, leading to a lower propensity to loan delinquencies. Additionally, we reveal that Chinese banks are inclined to extend more loans to regions affected by flood events without a significant increase in credit spreads. Consequently, our study highlights the importance of reconciling corporate social responsibility with climate risk management within the banking sector.

Suggested Citation

  • Chen, Sichong & Xu, Qiyuan & Zeng, Jingjing & Zhao, Yunfeng, 2025. "Ark amidst floods: Evidence from personal credit at a Chinese bank," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925006015
    DOI: 10.1016/j.irfa.2025.104514
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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