A0595
Title: How climate risk shapes U.S. systemic stability through syndicated lending
Authors: Monica Billio - University of Venice (Italy)
Alfonso Dufour - ICMA Centre (Italy)
Ana Sina - University of Reading (United Kingdom) [presenting]
Abstract: The purpose is to explore how climate risk shapes systemic stability in the U.S. syndicated loan market through a framework integrating 25 climate-related indicators adjusted for banks' geographic lending exposures. It combines eight established climate risk measures with a novel proxy for banks' green lending orientation and 16 region-specific indicators capturing anomalies, droughts, and extreme events weighted by loan distribution. Among this wide set of variables, four key factors drive systemic risk: Banks' environmental stance, extreme events in the South, precipitation anomalies in the East, and changes in U.S. climate policy. Systemic risk rises with exposure to climate-vulnerable regions but is mitigated by green lending. While climate policies are vital, they may cause short-term instability, stressing the need for a credible, rule-based transition. The findings call for independent regulation to embed climate risk in finance beyond political fluctuations.
