IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v13y2024i6p148-157.html
   My bibliography  Save this article

The impact of climate change on banks loan portfolios and strategies for effective climate risk management

Author

Listed:
  • Meshel Muzuva

    (MANCOSA (Honoris Universities))

  • Daniel Muzuva

    (Peta Semantics Private Limited)

Abstract

As extreme weather events continue to impact every continent and the world moves towards establishing a lower-carbon economy, the banking industry is expected to incorporate climate risk into their risk management practices. Climate change poses significant risks to bank loan portfolios through increased physical and transition risks. This study systematically analysed the literature to identify effective strategies for managing these risks. Our findings reveal that climate-related events can lead to substantial loan defaults and credit losses. To mitigate these impacts, banks can integrate climate risk into their risk management frameworks, adopt sustainable lending practices, and diversify their portfolios. Some banks have already implemented measures to mitigate climate risk through insurance policies, while others are incorporating sustainability criteria into their lending practices, such as financing green projects. By proactively addressing climate risks, banks can protect their portfolios, enhance financial resilience and contribute to a low-carbon economy. Key Words:Climate Risk; Green Financing; Loan Portfolios

Suggested Citation

  • Meshel Muzuva & Daniel Muzuva, 2024. "The impact of climate change on banks loan portfolios and strategies for effective climate risk management," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(6), pages 148-157, September.
    • Handle: RePEc:rbs:ijbrss:v:13:y:2024:i:6:p:148-157
    DOI: 10.20525/ijrbs.v13i6.3510
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/3510/2468
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v13i6.3510
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v13i6.3510?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
    ---><---

    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:rbs:ijbrss:v:13:y:2024:i:6:p:148-157. 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: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    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.