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Air pollution and bank risk taking: Evidence from China

Author

Listed:
  • Pan, Zhilei
  • Li, Shouwei
  • Li, Jingwei
  • Gong, Chen

Abstract

In the context of frequent environmental events that attract widespread attention, this paper investigates the impact of air pollution on bank risk-taking. Using the data of 105 city commercial banks in China from 2014 to 2021, our findings suggest that air pollution leads banks to reduce risk-taking, which is primarily driven by the frequency of extreme pollution days. Banks in cities with higher government environmental concern and those with smaller asset scale and lower risk resistance are relatively more sensitive to air pollution. The transparent environmental supervision weakens the effect of air pollution on bank risk-taking.

Suggested Citation

  • Pan, Zhilei & Li, Shouwei & Li, Jingwei & Gong, Chen, 2024. "Air pollution and bank risk taking: Evidence from China," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s154461232400624x
    DOI: 10.1016/j.frl.2024.105594
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    More about this item

    Keywords

    Air pollution; Commercial banks; Risk taking;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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