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Climate change attention and systemic financial risk: A TENET analysis

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  • Zhang, Cheng
  • Li, Yana
  • Liang, Shuo

Abstract

Climate change is becoming increasingly critical for global economic development and financial stability. This study uses the Tail Event-driven Network (TENET) method to integrate a Climate Change Attention index, derived from China Central Television News, into a risk contagion network to examine how climate change influences systemic financial risk. The results show that incorporating attention to climate change reduces systemic financial risk, whereas high- and low-carbon sectors exhibit heightened sensitivity. The Diversified Financials sector show reduced spillover to high-carbon industries, but strong connections with low-carbon industries are maintained. Overall, increased attention to climate change drives capital shifts in the Diversified Financials sector from high- to low-carbon industries, reducing network connectivity and systemic financial risk. These findings offer a novel theoretical perspective on climate-related risk contagions.

Suggested Citation

  • Zhang, Cheng & Li, Yana & Liang, Shuo, 2025. "Climate change attention and systemic financial risk: A TENET analysis," Finance Research Letters, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015848
    DOI: 10.1016/j.frl.2024.106555
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    Cited by:

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    4. Hu, Zinan & Borjigin, Sumuya, 2025. "Market downturns and asymmetric tail risk transmission speed in the US: Evaluating macroeconomic policy effectiveness during and after the COVID-19 pandemic," The Quarterly Review of Economics and Finance, Elsevier, vol. 102(C).
    5. Xiaotong Zhang, 2025. "Managerial Climate Attention and Systemic Risk of New Energy Vehicle Firms: Evidence from China," Sustainability, MDPI, vol. 17(17), pages 1-22, September.

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