Climate change and the pricing of sovereign debt: Insights from European markets

Climate change and the European banking sector: the effect of green technology adaptation and human capital

“…As a result, inconsistent policies, variation in definitions, disoriented policy coordination and lack of incentives for financial institutions may become hurdles for green financing (Ozili, 2022). Therefore, green technology adaptation (GTA) may require a special focus of the policymakers in such countries (Boitan and Marchewka-Bartkowiak, 2022). The results show banks are prone to increasing risks, especially liquidity risks; therefore, a significant focus on government policies such as subsidies and tax rebates in environmentally inclined countries can assist to reduce the burden of loan recovery cycle (Ma et al , 2023).…”

Global Patterns and Extreme Events in Sovereign Risk Premia: A Fuzzy S Deep Learning Comparative

“…The existing literature on sovereign risk premiums to analyse sovereign risk premium behaviour in developed countries is scarce (Ciżkowicz et al, 2022;Gilchrist et al, 2022;Özmen, 2019;Cathcart et al, 2020;Orlov, 2019;Thornton & Vasilakis, 2017;Bi, 2012), but especially in European countries (Della Corte et al, 2023;Boitan & Marchewka-Bartkowiak, 2022;Kadiric, 2022;Cecchetti, 2020;Fontana & Langedijk, 2019;Augustin et al, 2020;Seoane, 2019;Palić et al, 2017;Bianchi, 2016;Aristei & Martelli, 2014;Iara & Wolff, 2014). Kadiric (2022) examines recent changes in the British and European government bond markets in relation to the UK's choice to exit the European Union.…”

“…The findings indicate that the Brexit referendum had a notable effect on yield spreads, resulting in increased sovereign risk premiums in the UK and several other chosen Euro Area nations. On their side, Boitan and Marchewka-Bartkowiak (2022) examine the influence of various climate change metrics on the expense of government borrowing, indicated through sovereign bond yields and sovereign risk premiums, in a group of European Union nations spanning from 2000 to 2020. They conclude that climate change will exert a growing influence on the sovereign debt market.…”

“…On another side, considering the independent indicators, the ones most commonly reported in the literature to study the behaviour of the sovereign risk premium have been macroeconomic variables, such as Total Public Debt to GDP, Industrial Production, Trade Openness, GDP growth, Current account balance to GDP, Inflation rate (Boitan & Marchewka-Bartkowiak, 2022;Bizuneh & Geremew, 2021;Özmen, 2019;Mpapalida & Malikane, 2019;Fontana & Langedijk, 2019;Orlov, 2019;Doshi et al, 2017;Bianchi, 2016). Bizuneh and Geremew (2021) discover that the Covid-19 pandemic primarily affects sovereign risk premiums through GDP growth and indicators of political stability.…”

“…Analysing the methodology applied, a great number of studies have used statistical models for the analysis of the risk premium, highlighting Vector Autoregressions (VAR) (Cathcart et al, 2020;Palić et al, 2017;Bianchi, 2016), regression models (Kadiric, 2022;Boitan & Marchewka-Bartkowiak, 2022;Gilchrist et al, 2022;Bizuneh & Geremew, 2021;Arellano et al, 2020;Hofmann et al, 2020;Özmen, 2019;Orlov, 2019;Malliaropulos & Migialis, 2018;Konopczak & Konopczak, 2017;Lee et al, 2017a;Di Cesare et al, 2012) and Vector autoregression with stochastic volatility (Bi, 2012). By employing panel regressions and local projection analysis, Gilchrist et al (2022) ascertain that an escalation in global financial risk results in a significant and enduring expansion of sovereign bond spreads.…”