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Another Boiling Frog: the impact of climate-related events on financial outcomes in Brazil

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Listed:
  • Juliano Assunção
  • Flávia Chein
  • Giovanni Leo Frisari
  • Sérgio Mikio Koyama

Abstract

We evaluate the impact of climate-related events on the Brazilian banking sector. The analysis of physical risks reveals that, although short-run weather fluctuations and extreme events (droughts and floods) have limited impact on financial outcomes, climate change projections are expected to generate sizeable consequences to deposits and credit. We also document relevant geographical heterogeneity in the results and the importance of bank adaptation responses, avoiding areas with more considerable climate risks. The analysis of transition risks shows that the exposure of banks to green sectors concerning high impact sectors has a U-shape, growing since 2011.

Suggested Citation

  • Juliano Assunção & Flávia Chein & Giovanni Leo Frisari & Sérgio Mikio Koyama, 2023. "Another Boiling Frog: the impact of climate-related events on financial outcomes in Brazil," Working Papers Series 572, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:572
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    File URL: https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/wps572.pdf
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    References listed on IDEAS

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