Climate factor and banks’ resilience: Evidence from US banks


  • Iraklis Apergis University of Kent
  • Nicholas Apergis University of Piraeus



climate change, banks' resilience, US banks


This study explores how the climate factor impacts the resilience of the US banking system. Using an extended sample of banks, spanning the period 2000-2020, the findings document a negative effect of this climate factor on banks’ resilience. They also highlight the role of climate risk over the post-global financial crisis period. The results could have a substantial value as climate conditions can serve as an early warning system for policymakers and regulators in detecting signs of weakness, calling for immediate actions to mitigate potential vulnerabilities of banks.


Anderson, S.E., Anderson, T.L., Hill, A.C., Kahn, M.E., Kunreuther, H., Libecap, G.D., Mantripragada, H., Mérel, P., Plantinga, A.J., Smith, K.V., 2019. The critical role of markets in climate change adaptation. Climate Change Economics 10, 1950003.

Arellano, M., Bover, O., 1995. Another look at the instrumental variable estimation of error-components models. Journal of Econometrics 68(1), 29-51.

Banque de France, 2013. Financial stability and macroprudential policy. Focus 9(1), 1-7.

Blundell, R., Bond, S., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87(1), 115-143.

Carney, M., 2015. Breaking the tragedy of the horizon-climate change and financial stability. Speech at Lloyd's of London, 29 September 2015, URL: 62.

Chava, S., 2014. Environmental externalities and cost of capital. Management Science 60(15), 2223-2247.

Del Río, P., Labandeira, X., 2009. Climate change at times of economic crisis. FEDEA Coleccion Estudios Economicos, No. 5.

Duisenberg School of Finance, 2015. Non-traditional risk sources and financial system resilience. Duisenberg Strategy Series, No. 201501, Amsterdam.

Gai, P., 2013. Systemic Risk: The Dynamics of Modern Financial Systems. Oxford University Press, Oxford.

Ginglinger, E., Quentin, M., 2019. Climate risk and capital structure. Universiyt Paris-Dauphine Research Paper, No. 3327185 and European Corporate Governance Institute Finance Working Paper, No. 737.

Holló, D., Kremer, M., 2012. CISS-A composite indicator of systemic stress in the financial system. European Central Bank, Working Paper, No. 1426.

Jung, H., Engle, R., Berner, R., 2021. Climate stress testing. Federal Reserve Bank of New York Staff Reports, No. 977.

Krueger, P., Sautner, Z., Starks, L.T., 2020. The importance of climate risks for institutional investors. The Review of Financial Studies 33(3), 1067-1111.

Lane, J.-E., 2011. CO2 emissions and GDP. International Journal of Social Economics 38(4), 911-918.

Levine, R., Lin, C., Wang, Z., Xie, W., 2019. Finance and pollution: do credit conditions affect toxic emissions? University of Berkley, Working Paper.

Pesaran, M.H., 2007. A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics 22(2), 265-312.

Petersen, M.A., 2009. Estimating standard errors in finance panel data sets: comparing approaches. Review of Financial Studies 22(3), 435-480.

Reinders, H.J., Schoenmaker, D., Van Dijk, M.A., 2020. A finance approach to climate stress testing. CEPR Discussion Paper, No. 14609.

Ruza, C., Cuesta-González, M., Paredes-Gazquez, J., 2019. Banking system resilience: an empirical appraisal. Journal of Economic Studies 46(10), 1241-1257.

Stavytskyy, A., Giedraitis, V., Sakalauskas, D., Huettinger, M., 2016. Economic crises and emission of pollutants: a historical review of selected economies amid two economic recessions. Ekonomia 95(1), 7-21.

Vallascas, F., Keasey, K., 2012. Bank resilience to systemic shocks and the stability of banking systems: Small is beautiful. Journal of International Money and Finance 31(15), 1745-1776.




How to Cite

Apergis, I., & Apergis, N. (2022). Climate factor and banks’ resilience: Evidence from US banks. Economics and Business Letters, 11(4), 143–149.