IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v66y2023ics0275531923001666.html
   My bibliography  Save this article

Sovereign ratings change under climate risks

Author

Listed:
  • Sun, Xiaolei
  • Shen, Yiran
  • Guo, Kun
  • Ji, Qiang

Abstract

Do climate risks affect sovereign ratings? This study selects 117 countries around the globe and constructs the ordered logit model to study the relationship between climate risks and sovereign ratings quantitatively. It also determines the importance of climate risk factors compared with traditional sovereign rating determinants through a random forest model. The empirical results show that climate vulnerability and readiness have become new determinants that have received some attention in the sovereign rating system, and after controlling for traditional sovereign rating determinants including macroeconomic, political, and external factors, climate vulnerability has a significant negative effect on sovereign ratings, and climate readiness has a significant positive effect on sovereign ratings. The heterogeneity results suggest that the impacts of climate risks are stronger for developing and high-damaged countries and that greater gains can be achieved by increasing climate readiness for these countries. This study provides new evidence to quantify the impacts of climate risks on sovereign ratings and provides decision support for countries to cope with the adverse impacts of climate change.

Suggested Citation

  • Sun, Xiaolei & Shen, Yiran & Guo, Kun & Ji, Qiang, 2023. "Sovereign ratings change under climate risks," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001666
    DOI: 10.1016/j.ribaf.2023.102040
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531923001666
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2023.102040?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sun, Yanpeng & Song, Yuru & Long, Chi & Qin, Meng & Lobonţ, Oana-Ramona, 2023. "How to improve global environmental governance? Lessons learned from climate risk and climate policy uncertainty," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1666-1676.
    2. Guo, Kun & Luan, Liyuan & Cai, Xiaoli & Zhang, Dayong & Ji, Qiang, 2024. "Energy trade stability of China: Policy options with increasing climate risks," Energy Policy, Elsevier, vol. 184(C).
    3. Ma, Dandan & Zhang, Yunhan & Ji, Qiang & Zhao, Wan-Li & Zhai, Pengxiang, 2024. "Heterogeneous impacts of climate change news on China's financial markets," International Review of Financial Analysis, Elsevier, vol. 91(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001666. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.