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Possible real economic consequences of financial actors' attitudes towards climate change and realized risks

Peter Malits (), Marton Nedim El-Meouch () and Aron Drabancz ()
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Peter Malits: Phd Student, Corvinus University of Budapest
Marton Nedim El-Meouch: Phd Student, University of Pécs
Aron Drabancz: Phd Student, Corvinus University of Budapest

Public Finance Quarterly, 2022, vol. 67, issue 3, 430 - 447

Abstract: Due to the interconnectedness of economic sectors, the effects of climate change on the real economy are also reflected in the financial system. In this study, we examine the attitudes of key players in the financial system (central and commercial banks) towards the financial risks of climate change, based on the literature in the field. Financial institutions may come up with a number of innovative tools to address emerging risks and support a well-scheduled transition, however, the introduction of innovations is not smooth. The key players in the financial system, the climate change-specific relationships of the corporate sector and the main channels connecting them are illustrated using a corporate project evaluation model, partly assessing which variables and risks a company should consider when making an investment decision. The results show that climate change can affect the performance of financial institutions in a number of ways, but these risks cannot yet be clearly identified in Hungarian interest rate spreads.

Keywords: climate change; financial institutions; interest rate spread (search for similar items in EconPapers)
JEL-codes: H43 Q56 (search for similar items in EconPapers)
Date: 2022
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