Financial risk under the shock of global warming: Evidence from China

Abstract

The economic and financial risks of global warming have become a hot issue of academic interest. This article analyzes global warming, financial risk, and the economic statistics of 30 provinces in China from 2010 to 2020 as a sample to assess the influence of the severity of global warming on financial risk. Global warming is found to affect financial risk and to have a substantial favorable influence on the amount of financial risk. Global warming also has significant effects on households, enterprises, financial institutions, and governments. There is heterogeneity in the effects of climate variation on financial risk. Global warming will cause a greater accumulation of financial risk in economically developed regions. Additionally, it will lead to financial risks by causing a decline in the incomes of residents, a decline in the profits of enterprises, growth in the number of loans that financial institutions consider to be nonperforming, and a widening of the gap between government revenue and expenditures. All of these effects will have an adverse domino effect on the economy. To reduce the financial risks caused by global warming, countermeasures are being offered to ensure social cohesion, conduct risk stress testing, create risk mitigation instruments, and encourage environmentally responsible development. This paper discusses policies and provides policymakers with recommendations on how to cope with the systematic financial risks induced by climate variation.

The nexus between Global Warming, Economic Growth, and Cereal Production in Egypt

“…A Study examines the effect of global warming severity on financial risk conducted by, Gao et al (2023) to analyzing financial risk, global warming, and the financial data of 30 Chinese provinces from year 2010 to year 2020. Principal Results discovered that financial risk is impacted by global warming and that it significantly positively influences the level of financial risk.…”

“…defined in many Literature like, (Diffenbaugh & Burke, 2019;Diffenbaugh et al, 2021;Gamal et al, 2021;Gao et al, 2023;Kyarem et al, 2021;Eissa & Khalifa, 2023;Regmi et al, 2022;Sarhan, 2022;Uteulin & Zhientaev, 2022;Yasser & Eissa, 2023). However, none of the authors above used the three Variables to gather in one study, which gives my study a privilege over the other Literature on the other hand the three variables of this study are connected and affect each other, another aspect for the importance of my study is absence of clarity in the link between Global Warming, Economic growth (Zhang, 2023) from one side and Cereal production when predicting some economic and environmental issue in a developing country like Egypt as emerging topic for more future decisions and studies.…”