Abstract
We examine how banks adjust credit supply in areas with higher exposure to climate risks by utilizing the province-level air pollution and loan growth data of a large emerging market, Turkey, following the Paris Agreement in 2015. Our results show that banks limit their credit extension to more polluted provinces in the post-agreement interval, implying that banks consider climate change-related risks and adjust their credit provisioning accordingly. Our baseline findings are intact against a myriad of robustness checks. We also find that the shift in the climate risk-credit provisioning nexus is asymmetric depending on the levels of air pollution.
| Original language | English |
|---|---|
| Article number | 110859 |
| Number of pages | 5 |
| Journal | Economics Letters |
| Volume | 220 |
| Early online date | 29 Sept 2022 |
| DOIs | |
| Publication status | Published - 1 Nov 2022 |
Keywords
- Air pollution
- Climate change
- Paris Agreement
- Bank loans
- Financial stability
Access to Document
- Aslan_2022_EL_Banklending_CC
Copyright © 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).