The Shocks of Climate Change on Bank Loans
Climate change poses new challenges to the banking sector. Thus, in this paper, we investigate the effect of climate change on bank loans using panel data covering 7,865 banks in Indonesia from 2011-2021. We define bank loans into three variables, i.e., outstanding credit, non-performing loans (NPL...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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EconJournals
2023-09-01
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| Series: | International Journal of Energy Economics and Policy |
| Subjects: | |
| Online Access: | http://econjournals.com/index.php/ijeep/article/view/14773 |
| _version_ | 1797658179974201344 |
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| author | Agus Sugiarto Ni Nyoman Puspani Mustika Septiyas Trisilia |
| author_facet | Agus Sugiarto Ni Nyoman Puspani Mustika Septiyas Trisilia |
| author_sort | Agus Sugiarto |
| collection | DOAJ |
| description |
Climate change poses new challenges to the banking sector. Thus, in this paper, we investigate the effect of climate change on bank loans using panel data covering 7,865 banks in Indonesia from 2011-2021. We define bank loans into three variables, i.e., outstanding credit, non-performing loans (NPLs), and interest rates. Our results suggest that, of the six climate-related disasters, the flood has a significant and consistent effect. An increase in the frequency of floods reduces credit and increases NPLs. Consistent results are found for disaster risk index scores. The empirical results show that there is a negative effect of climate change on bank loans so further policies from banks and regulators' side are needed.
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| first_indexed | 2024-03-11T17:55:22Z |
| format | Article |
| id | doaj.art-b73775b1b9c2467aab20167c4f1b9ec1 |
| institution | Directory Open Access Journal |
| issn | 2146-4553 |
| language | English |
| last_indexed | 2024-03-11T17:55:22Z |
| publishDate | 2023-09-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Energy Economics and Policy |
| spelling | doaj.art-b73775b1b9c2467aab20167c4f1b9ec12023-10-17T14:39:13ZengEconJournalsInternational Journal of Energy Economics and Policy2146-45532023-09-0113510.32479/ijeep.14773The Shocks of Climate Change on Bank LoansAgus Sugiarto0Ni Nyoman Puspani1Mustika Septiyas Trisilia2Financial Services Authority of Indonesia, Indonesia.Financial Services Authority of Indonesia, Indonesia.Financial Services Authority of Indonesia, Indonesia. Climate change poses new challenges to the banking sector. Thus, in this paper, we investigate the effect of climate change on bank loans using panel data covering 7,865 banks in Indonesia from 2011-2021. We define bank loans into three variables, i.e., outstanding credit, non-performing loans (NPLs), and interest rates. Our results suggest that, of the six climate-related disasters, the flood has a significant and consistent effect. An increase in the frequency of floods reduces credit and increases NPLs. Consistent results are found for disaster risk index scores. The empirical results show that there is a negative effect of climate change on bank loans so further policies from banks and regulators' side are needed. http://econjournals.com/index.php/ijeep/article/view/14773Climate Change, Financial Risk, Panel Data |
| spellingShingle | Agus Sugiarto Ni Nyoman Puspani Mustika Septiyas Trisilia The Shocks of Climate Change on Bank Loans International Journal of Energy Economics and Policy Climate Change, Financial Risk, Panel Data |
| title | The Shocks of Climate Change on Bank Loans |
| title_full | The Shocks of Climate Change on Bank Loans |
| title_fullStr | The Shocks of Climate Change on Bank Loans |
| title_full_unstemmed | The Shocks of Climate Change on Bank Loans |
| title_short | The Shocks of Climate Change on Bank Loans |
| title_sort | shocks of climate change on bank loans |
| topic | Climate Change, Financial Risk, Panel Data |
| url | http://econjournals.com/index.php/ijeep/article/view/14773 |
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