The impact of climate change on credit cycles: Evidence from China's bond market

• DOI: 10.1016/j.techfore.2024.123490
• Publication Date: 2024-06-28T04:15:45Z
• Authors: Kung-Cheng Ho; Cheng Yan; Xiaoran Kong
• Keywords: Corporate bond; Endogeneity

This study examines the long-term impacts of climate change on credit spreads using a sample A-share listed companies that issued corporate bonds between 2014 and 2020. The results indicate greater risk company faces, its bonds' spread; secondary bond market perceives potential harm caused by change. conclusion remains valid after endogeneity treatment robustness tests. Furthermore, mechanism testing reveals affects increasing probability bankruptcy, profit volatility, negative investor sentiment. heterogeneity test considers three aspects, namely, individual enterprises' internal characteristics, creditor protection measures, regional green finance levels. Finally, this introduces impact economic cycles to conclusions at macro level closely follow topic. Thus, we provide new evidence perspectives for exploring important policy implications healthy development China's market.