The Shocks of Climate Change on Bank Loans

Authors

  • Agus Sugiarto Financial Services Authority of Indonesia, Indonesia.
  • Ni Nyoman Puspani Financial Services Authority of Indonesia, Indonesia.
  • Mustika Septiyas Trisilia Financial Services Authority of Indonesia, Indonesia.

DOI:

https://doi.org/10.32479/ijeep.14773

Keywords:

Climate Change, Financial Risk, Panel Data

Abstract

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.

Downloads

Download data is not yet available.

Downloads

Published

2023-09-16

How to Cite

Sugiarto, A., Puspani, N. N., & Trisilia, M. S. (2023). The Shocks of Climate Change on Bank Loans. International Journal of Energy Economics and Policy, 13(5), 493–514. https://doi.org/10.32479/ijeep.14773

Issue

Vol. 13 No. 5 (2023)

Section

Articles

License

Submission of an article implies that the work described has not been published previously , that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication.