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Climate change and credit risk in rural financial institutions: A study based on transition risk

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  • Jiaji Wang
  • Qianting Ma
  • Chao Wang
  • Tianxiang Sheng

Abstract

This study empirically investigates the impact of climate change on credit risks in rural financial institutions, emphasizing transition risk. We analyzed data from 202 rural financial institutions across, China spanning 2012 to 2020. The empirical findings reveal the following: Firstly, climate change exerts an inverted U‐shaped influence on credit risks in rural financial institutions. Secondly, the inverted U‐shaped relationship is influenced by both the level of digital development and uncertainty in climate policy. Lastly, heightened levels of digital development and increased uncertainty about climate policy can mitigate the negative effects of climate change.

Suggested Citation

  • Jiaji Wang & Qianting Ma & Chao Wang & Tianxiang Sheng, 2024. "Climate change and credit risk in rural financial institutions: A study based on transition risk," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(6), pages 4208-4226, September.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:6:p:4208-4226
    DOI: 10.1002/mde.4248
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