September 11, 2025Open Access

Climate Mirroring in Bank Credit: The Dual-Risk Resonance Effect

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Both physical and transition climate risks significantly elevate bank credit risk, affecting financial stability.
Analysis of panel data from 189 Chinese banks shows climate-induced economic losses raise default probabilities.
The study employs a two-way fixed effects model to elucidate the transmission of climate risks to banks.
Findings indicate spatial heterogeneity in credit risk exposure among banks across various Chinese regions.

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Analysis reveals climate risks elevate bank credit dangers in Chinese banks, suggesting stronger governance needed.

Xu et al. (2025) studied this question.

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