How Exposed Are U.S. Banks’ Loan Portfolios to Climate Transition Risks?

Hyeyoon Jung, Joao Santos and Lee Seltzer

No 20230710, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Much of the work on climate risk has focused on the physical effects of climate change, with less attention devoted to “transition risks” related to negative economic effects of enacting climate-related policies and phasing out high-emitting technologies. Further, most of the work in this area has measured transition risks using backward-looking metrics, such as carbon emissions, which does not allow us to compare how different policy options will affect the economy. In a recent Staff Report, we capitalize on a new measure to study the extent to which banks’ loan portfolios are exposed to specific climate transition policies. The results show that while banks’ exposures are meaningful, they are manageable.

Keywords: risk exposures; climate risk; banks; Network for Greening the Financial System (NGFS) scenarios (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2023-07-10
New Economics Papers: this item is included in nep-ban, nep-ene and nep-env
Note: Editor’s note: Since this post was first published, the y-axis labels in the first four charts have been corrected. July 10, 12:30 p.m.
References: Add references at CitEc
Citations:

Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2023 ... te-transition-risks/ Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:96458

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().