The Determinants of Climate Risk Disclosure in Malaysian Banking Sector: A Conceptual Framework

Cheah Chee Keong (), Wong Kok Yaw, Nakesvari A/P Shanmugam, Tan Kock Lim, Ong Hock Siong, Kong Yin Mei, Devagi Erusan and Adam Arif Lee Aik Keang
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Cheah Chee Keong: Universiti Tunku Abdul Rahman, Faculty of Business and Finance
Wong Kok Yaw: Tunku Abdul Rahman University of Management and Technology, Faculty of Accountancy, Finance & Business
Nakesvari A/P Shanmugam: Tunku Abdul Rahman University of Management and Technology, Faculty of Accountancy, Finance & Business
Tan Kock Lim: UOW Malaysia KDU Penang University College, School of Business
Ong Hock Siong: Universiti Tunku Abdul Rahman, Faculty of Business and Finance
Kong Yin Mei: Universiti Tunku Abdul Rahman, Faculty of Business and Finance
Devagi Erusan: Universiti Tunku Abdul Rahman, Faculty of Business and Finance
Adam Arif Lee Aik Keang: Universiti Tunku Abdul Rahman, Faculty of Business and Finance

A chapter in Proceedings of the 11th International Conference on Business, Accounting, Finance and Economics (BAFE 2023), 2023, pp 322-334 from Springer

Abstract: Abstract Climate change poses substantial physical and transitional risks to Malaysian banks through impacts on their customers and loan portfolios. Despite BNM guidance encouraging climate risk management and disclosure, reporting remains limited. This study develops a conceptual framework grounded in stakeholder theory to examine determinants of voluntary climate risk disclosure using mixed methods. The framework proposes bank governance and bank specific characteristic shape transparency through pressures from stakeholders demanding fuller reporting. Specifically, board oversight, gender diversity, bank capital, profitability and size are hypothesized to influence disclosure. Machine learning text analysis will quantify reporting disclosure before panel regressions test relationships with hypothesized determinants. This localized study addresses a gap on climate risk disclosure practices in Malaysia’s emerging economy context. Findings can guide policy and industry initiatives aimed at improving transparency and resilience of the banking sector to climate change. Enhanced disclosure better equips stakeholders to assess bank exposures and risk management strategies.

Keywords: Climate risk disclosure; Malaysia Bank; Bank governance; Machine learning; Text Mining (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-342-9_24

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DOI: 10.2991/978-94-6463-342-9_24

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