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The Impact of Climate Change on Financial Stability

Author

Listed:
  • Lingke Wu

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China
    Beijing Laboratory of National Economic Security Early-Warning Engineering, Beijing Jiaotong University, Beijing 100044, China)

  • Dehong Liu

    (Beijing Laboratory of National Economic Security Early-Warning Engineering, Beijing Jiaotong University, Beijing 100044, China)

  • Tiantian Lin

    (School of Economics and Finance, Huaqiao University, Quanzhou 362011, China)

Abstract

Climate risks and response policies have important impacts on a country’s macroeconomic development and financial stability. Based on the data from 2005 to 2020, this paper takes temperature deviation as the main representative variable of climate risk to study the impact of climate change on financial stability. The two-way fixed-effect results show that there is a negative relationship between temperature deviation and financial stability, and the influence of temperature deviation has a lag. However, the effects of temperature deviation on financial stability varied across the samples. The central provinces, non-coastal provinces, non-Yangtze River Delta and Pearl River Delta provinces, and risk zone I had stronger temperature responses and financial stability was affected to a greater extent. The other regions experienced less of an impact.

Suggested Citation

  • Lingke Wu & Dehong Liu & Tiantian Lin, 2023. "The Impact of Climate Change on Financial Stability," Sustainability, MDPI, vol. 15(15), pages 1-18, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:15:p:11744-:d:1206480
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