Climate-Related Communication of Central Banks and Systemic Risk

Alin Marius Andries, Steven Ongena and Nicu Sprincean
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Alin Marius Andries: Alexandru Ioan Cuza University of Iasi; Romanian Academy - Institute for Economic Forecasting
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)
Nicu Sprincean: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iași; National Institute for Economic Research, Romanian Academy

No 26-69, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This study examines the influence of green rhetoric from central banks on banking institutions. Using data from 489 publicly listed banks in 47 countries from 2000 to 2023, we find that a greater proportion of climate-related discourse in central bank speeches is positively correlated with lower systemic risk among banks. This may be because communication acts as a signaling mechanism, conveying the anticipated direction of regulatory policy and supervisory priorities, and the extent to which environmental risks are integrated into financial stability frameworks. Effective climate communication reduces ambiguity, encouraging banks to promptly incorporate climate risks into credit assessments and financial risk management, while enabling the gradual repricing of exposures to climate-sensitive assets, with a beneficial effect on their systemic behavior. Moreover, the risk-mitigating benefits of central banks engaging in climate-related matters are more significant for banks with above-median annual changes in the environmental score, as well as for those operating in jurisdictions with narrower central bank mandates, more stringent climaterelated financial policies, lower adaptive capacity to climate hazards, higher carbon intensity, and elevated levels of economic policy uncertainty, stock market volatility, and financial stress. The findings of this study carry substantial policy implications within the context of central banks' expanding involvement in climate-related issues and their subsequent influence on market participants' perceptions.

Keywords: central banking; climate-related communication; climate change; systemic risk (search for similar items in EconPapers)
JEL-codes: E58 G21 G32 Q54 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2669

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