Model Proposal on the Impact of Applying Carbon Border Adjustment Mechanism in Determining Loan Provisions and Collateral Amounts: Climate Multiplier

Teoman Tagtekä°n

Journal of BRSA Banking and Financial Markets, 2024, vol. 18, issue 2, 116-134

Abstract: The aim of this study is to examine the issue of reflecting the effect of the CBAM in the financial dimension to the bank records in the crediting process of the enterprises exporting to the EU within the scope of the CBAM - Carbon Border Adjustment Mechanism and to propose an alternative solution. In the crediting process of enterprises exporting to the EU within the scope of the CBAM, it would be more realistic to reflect the CBAM effect on bank records in financial terms. To this end, the reflection of the CBAM effect on the bank's loan collateral and provision calculations, although it may seem like an additional financial burden, will act as an additional shield to protect the bank against possible financial losses in the face of the risk taken. It is foreseen that the awareness regarding the reflection of the impact of the CBAM on the loan collateral and provision calculations of banks has not yet been fully formed, and that the proposed regulation may serve as an extra protection for banks against possible financial losses in the face of the risk arising with the implementation of the proposed regulation.

Keywords: CBAM(Carbon Border Adjustment Mechanism); ETS-Emision Trading System; ECL-Expected Credit Loss; Loan Collateral Amount. Journal: Journal of BRSA Banking and Financial Markets (search for similar items in EconPapers)
JEL-codes: G21 Q54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bdd:journl:v:18:y:2024:i:2:p:116-134

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