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Climate uncertainty and marginal climate capital needs

Timotheos Angelidis, Athanasios Sakkas and George Spiliotopoulos

Finance Research Letters, 2023, vol. 56, issue C

Abstract: The paper shows that climate policy uncertainty affects the future marginal capital shortfall of global financial firms, and 11.28% more capital will be needed under a severe climate scenario. After the signing of the Treaty of the Paris Agreement, the effect has been stabilized at the global level. However, there are strong indications that the USA's withdrawal from the agreement increased the climate capital needs for US firms. Our results have significant implications for regulators, as they are related to the stability of the financial system under a significant climate stress scenario.

Keywords: Climate risk; Marginal climate capital needs (search for similar items in EconPapers)
JEL-codes: G15 G18 Q50 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323004324

DOI: 10.1016/j.frl.2023.104060

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