The Influence of Climate Shocks on the Financing Constraints of Listed Enterprises

Kaidi Jiang ()
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Kaidi Jiang: East China Normal University, School of Economics and Management

A chapter in Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025), 2025, pp 642-651 from Springer

Abstract: Abstract In the realm of global climate change, climate risk has emerged as a significant determinant influencing economic development. This paper utilises panel data from 2008 to 2022 to identify the occurrences of extreme high temperatures, extreme low temperatures, and significant precipitation events in Chinese prefecture-level cities as indicators of climate shocks, and investigates their mechanisms of action and effects on the financing constraints of publicly listed companies. The study reveals that excessive rainfall markedly exacerbates financial constraints but extreme high and low temperatures have a minimal effect. Heterogeneity study indicates that excessive rainfall significantly adversely affects the financial restrictions of firms in both the West and the East. Conversely, extremely low temperatures substantially damage businesses in the West, with a key observation being that non-public enterprises are more seriously impacted by climatic disruptions. The effect mechanism involves harsh climate intensifying financial constraints by harming fixed assets, impairing commercial operations, and obstructing technological advancement within enterprises. In light of this circumstance, it is advisable for firms to enhance their capacity to handle climate risk, for financial institutions to refine their climate risk assessment systems, and for the government to intensify climate risk management to alleviate adverse effects on enterprise financing.

Keywords: Climate risk; Financial restrictions; Listed companies; Severe weather (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-835-6_68

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DOI: 10.2991/978-94-6463-835-6_68

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