The impact of climate change on the resilience of banking systems in selected Sub-Saharan economies

Emmanuel Amo-Bediako (), Oliver Takawira () and Ireen Choga ()

International Journal of Applied Economics, Finance and Accounting, 2023, vol. 17, issue 2, 469-482

Abstract: Climate change is seen as a peril to the overall financial system, yet this revelation is in its infant stage. On that note, this study investigates the impact of climate change shocks on banking system resilience in selected Sub-Saharan economies. The study relies on a quantitative research method by first employing a Generalized Auto Regressive Conditional Heteroskedasticity (GARCH) (1,1) model to forecast the volatility series of the climate change variables. Further, the study applies the panel ARDL model to disseminate the long- and short-term associations between the obtained conditional variances of climate change parameters and banking system resilience within a time frame of 1996-2017 for 29 selected economies. The results show that banking systems in SSA are resilient to temperature shocks in the long-term. However, the study finds that the banking systems in SSA are not resilient to both precipitation and greenhouse gas shocks in the long-term. For the short-term impact assessment, the study finds that banking systems in SSA are resilient to only precipitation shocks. The study concludes that banking sectors in SSA should vigorously conduct stress-testing on climate-related financial risks and also design forward-looking strategies as well as climate change risk management procedures in the wake of climate change events.

Keywords: Banking system resilience; Climate change; Climate financial econometrics; Panel ARDL; SSA. (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://onlineacademicpress.com/index.php/IJAEFA/article/view/1203/804 (application/pdf)

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:oap:ijaefa:v:17:y:2023:i:2:p:469-482:id:1203

Access Statistics for this article

More articles in International Journal of Applied Economics, Finance and Accounting from Online Academic Press
Bibliographic data for series maintained by Heather Rothman ().