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Climate uncertainty and marginal climate capital needs

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  • Angelidis, Timotheos
  • Sakkas, Athanasios
  • Spiliotopoulos, George

Abstract

The paper shows that climate policy uncertainty affects the future marginal capital shortfall of global financial firms, and 11.28% more capital will be needed under a severe climate scenario. After the signing of the Treaty of the Paris Agreement, the effect has been stabilized at the global level. However, there are strong indications that the USA's withdrawal from the agreement increased the climate capital needs for US firms. Our results have significant implications for regulators, as they are related to the stability of the financial system under a significant climate stress scenario.

Suggested Citation

  • Angelidis, Timotheos & Sakkas, Athanasios & Spiliotopoulos, George, 2023. "Climate uncertainty and marginal climate capital needs," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323004324
    DOI: 10.1016/j.frl.2023.104060
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    More about this item

    Keywords

    Climate risk; Marginal climate capital needs;

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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