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on Financial Development and Growth |
| By: | Martínez-Jaramillo, Serafín; Montañez-Enríquez, Ricardo; Ossandon Busch, Matias; Ramos-Francia, Manuel; Rodríguez-Martínez, Anahí; Sánchez-Martínez, Manuel |
| Abstract: | Does financial development shield countries from the pass-through of financial shocks to real outcomes? We evaluate this question by characterising the probability density of expected GDP growth conditional on financial stability indicators in a panel of 28 countries. Our robust results unveil a non-linear nexus between financial stability and expected GDP growth, depending on countries' degree of financial development. While both domestic and global financial factors affect expected growth, the effect of global factors is moderated by financial development. This result highlights a previously unexplored channel trough which financial development can break the link between financial (in)stability and GDP growth. |
| Keywords: | economic growth,financial development,financial stability,growth at risk |
| JEL: | G15 O16 O43 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:32022&r= |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy); Christopher Quaidoo (Legon, Accra, Ghana); Pamela E. Ofori (University of Insubria, Varese, Italy) |
| Abstract: | This study uses machine learning techniques to identify the key drivers of financial development in Africa. To this end, four regularization techniques— the Standard lasso, Adaptive lasso, the minimum Schwarz Bayesian information criterion lasso, and the Elasticnet are trained based on a dataset containing 86 covariates of financial development for the period 1990 – 2019. The results show that variables such as cell phones, economic globalisation, institutional effectiveness, and literacy are crucial for financial sector development in Africa. Evidence from the Partialing-out lasso instrumental variable regression reveals that while inflation and agricultural sector employment suppress financial sector development, cell phones and institutional effectiveness are remarkable in spurring financial sector development in Africa. Policy recommendations are provided in line with the rise in globalisation, and technological progress in Africa. |
| Keywords: | Africa, Elasticnet, Financial Development, Financial Inclusion, Lasso, Regularization, Variable Selection |
| JEL: | C01 C14 C52 C53 C55 E5 O55 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:21/074&r= |
| By: | Nicolas Destrée (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Karine Gente (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Carine Nourry (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper studies the impact of migration and workers' remittances on human capital and economic growth when young individuals face debt constraints to finance education. We consider an overlapping generations model à la de la Croix and Michel (2007). In this no-commitment setting, education is the engine of growth. Individuals may choose to default on their debt and be excluded from the asset market. We show that remittances tend to tighten the borrowing constraints for a given level of interest rate, but may enhance growth at the equilibrium. The model replicates both negative and positive impacts of migration and remittances on economic growth underlined by the empirical literature. We calibrate the model for 30 economies. |
| Keywords: | Migration,Remittances,Overlapping generations,Human capital,Borrowing constraints,Indeterminacy |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03170022&r= |
| By: | Pham, Chau (University of Warwick) |
| Abstract: | This paper addresses two issues : the underinvestment in education and the povertytrap that ensues for poor households. In a setting where the end outcome is binary, aninvesting agent faces two levels of risk, one in the intermediate outcome - how muchhuman capital she obtains for a given amount of investment, and one inherent in theend outcome - whether she gets the high-paid job. We show that when human capital is inheritable, risk-averse agents are deterred from investing because their parentsare not sufficiently educated. Moreover, the U-shaped expected utility means theoptimal investment occurs at either corners. If this investment or underinvestment is sustained through generations, a separating equilibrium such that poor households do not invest while wealthier ones do emerges. The divergence in educational attainmenttranslates into a divergence in wealth between those who invest and those who do not.A simple calibration employing data from the NLSY97 demonstrates the existence ofthese equilibria at different levels of risk-aversion. |
| Keywords: | intergenerational human capital ; poverty trap ; risk-aversion ; underinvestment JEL Classification: I32 ; I24 ; C60 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:wrkesp:28&r= |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | Compared to other regions of the world, the potential for information technology penetration in sub-Saharan Africa (SSA) is very high. Unfortunately, productivity levels in the region are also very low. This study investigates the importance of information technology in influencing the effect of foreign direct investment (FDI) on total factor productivity (TFP) dynamics. The focus is on 25 countries in SSA. Information technology is measured with mobile phone penetration and internet penetration, while the engaged TFP productivity dynamics are TFP, real TFP, welfare TFP, and real welfare TFP. The empirical evidence is based on the Generalised Method of Moments. The findings show that, with the exception of regressions pertaining to real TFP growth for which the estimations do not pass post-estimation diagnostic tests, it is apparent that information technology (i.e. mobile phone penetration and internet penetration) modulate FDI to positively influence TFP dynamics (i.e. TFP, welfare TFP, and welfare real TFP). Policy and theoretical implications are discussed. |
| Keywords: | Productivity; Foreign Investment; Information Technology; Sub-Saharan Africa |
| JEL: | E23 F21 F30 L96 O55 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:22/019&r= |
| By: | Alain Ndikumana |
| Abstract: | In recent decades, Africa has received a large share of official development assistance compared to other regions of the world. Using AidData for 2000-13, this paper examines the effects of aid to productive sectors on manufacturing growth in Africa. Econometric results show that increased assistance to these sectors is associated with an increase in growth of the manufacturing sector, with complementary effects from allocations to economic services and infrastructures. |
| Keywords: | Aid, Production, Growth, Manufacturing |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-22&r= |
| By: | McLean, Sheldon; Ram, Justin |
| Abstract: | Caribbean economies have been grappling with high debt, low growth and structural challenges which have been exacerbated since the onset of the COVID-19 pandemic. There is, therefore, an urgent need to reduce debt and promote resilience building for these economies. The Economic Commission for Latin America and the Caribbean (ECLAC) has proposed the establishment of the Caribbean Resilience Fund (CRF) as a mechanism to contribute to the achievement of these critical development goals. The CRF is a special purpose financing vehicle intended to leverage long-term low-cost development financing for the Caribbean, while at the same time ensuring the availability of resources for investment in adaptation and mitigation initiatives, in the development of green industries thereby promoting resilience building and the structural transformation of Caribbean economies. To advance the implementation of the CRF, this study provides a roadmap for its structure and establishment, which comprises three distinct thematic windows. They include resilience building; inclusive growth and competitiveness; and liquidity and debt reduction. |
| Date: | 2022–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col033:47740&r= |
| By: | Julian di Giovanni; Manuel García-Santana; Priit Jeenas; Enrique Moral-Benito; Josep Pijoan-Mas |
| Abstract: | We provide a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. We start by using a newly created panel dataset of administrative data that merges Spanish credit register loan data, quasicensus firm-level data, and public procurement projects to study firm selection into procurement and the effects of procurement on credit growth and firm growth. We show evidence consistent with the hypotheses that there is selection of large firms into procurement, that procurement contracts provide useful collateral for firms -more so than sales to the private sector- and that procurement contracts facilitate firm growth beyond the contract duration. We next build a model of firm dynamics with both asset-based and earnings-based borrowing constraints and a government that buys goods and services from private sector firms. We use the calibrated model to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. We find that granting procurement contracts to small firms, either by directly targeting them or by slicing large contracts into smaller ones, helps these firms grow and overcome financial constraints in the long run. However, we also find that reducing the average size of contracts -or making it less likely for large firms to access them- removes saving incentives for large firms, whose negative effects on capital accumulation can overcome the expansionary consequences for small firms and hence generate a drop in aggregate output. |
| Keywords: | Government procurement, financial frictions, capital accumulation, aggregate productivity |
| JEL: | E22 E23 E62 G32 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1821&r= |
| By: | Eszter Balogh; Adám Banai; Tirupam Goel; Péter Lang; Martin Stancsics; Előd Takáts; Álmos Telegdy |
| Abstract: | We assess the effects of non-repayable subsidies on financially constrained and unconstrained Hungarian SMEs. Using rejected subsidy applicants as control group and bank queries to the credit-registry to identify firms that applied for but did not receive a loan, we show that subsidies generate a sizeable incremental impact on asset growth of constrained firms relative to unconstrained businesses. This effect, however, is transitory and does not translate into higher sales, profitability or productivity. Financing, therefore, may not be the primary hurdle for these SMEs, and credit constraints may reflect other shortcomings, such as lack of good management or viable projects. |
| Keywords: | SMEs, subsidies, credit constraints, emerging market economies, difference-in-differences, credit registry micro-data |
| JEL: | G38 G21 E58 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:984&r= |
| By: | Li, Xiang |
| Abstract: | By adopting a difference-in-differences specification combined with propensity score matching, we provide evidence using the microdata of German banks that stateowned savings banks have lent less than credit cooperatives during the COVID-19 crisis. In particular, the weaker lending effects of state-owned banks are pronounced for long-term and nonrevolving loans but insignificant for short-term and revolving loans. Moreover, the negative impact of government ownership is larger for borrowers who are more exposed to the COVID-19 shock and in regions where the ruling parties are longer in office and more positioned on the right side of the political spectrum. |
| Keywords: | bank credit,COVID-19,state-owned banks |
| JEL: | D72 G21 P16 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:62022&r= |
| By: | Ferreira, Miguel A.; Eça, Afonso; Prado, Melissa Porras; Rizzo, A. Emanuele |
| Abstract: | We show that FinTech lending affects credit markets and real economic activity using a unique data set of a Peer-to-Business platform for which we have the universe of loan applications. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms use FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that access to FinTech spurs firm growth, employment and investment relative to firms that get their loan application rejected. In addition, firms with access to FinTech increase leverage and substitute long-term bank debt with FinTech debt. Our findings suggest that FinTech allows firms to preserve financial flexibility, reduce their bank dependence and exposure to banking shocks. JEL Classification: G21, G23, O33 |
| Keywords: | bank relationships, debt structure, FinTech, firm growth, small business lending |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222639&r= |
| By: | Panagiotis Avramidis; George Pennacchi; Konstantinos Serfes; Kejia Wu |
| Abstract: | This paper analyzes how bank regulation that promotes greater access to credit impacts the financing of targeted small firms. It develops a model where banks compete with trade creditors to fund small firms and applies it to study the effects of the Community Reinvestment Act (CRA). The empirical tests reveal that a CRA-induced increase in bank loans reduces small firms’ use of relatively expensive trade credit. The effect is more profound in low- and medium-income areas where financial constraints are tighter due to low bank competition. The effect is also larger for small firms that operate in trade credit-dependent industries. |
| Keywords: | Competition; Regulation; Trade credit; Small business loans |
| JEL: | G14 G21 L13 L50 L49 |
| Date: | 2022–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93724&r= |
| By: | Alessandro Barbera; Áron Gereben; Marcin Wolski |
| Abstract: | We estimate heterogeneous treatment effects of the EIB fnancial support on European firms between 2008 and 2015. The relevant control groups are created with propensity score matching and the effects are estimated in a difference-in-differences framework, controlling for firm-level and country-sector-year fixed effects. We find that the positive effects of EIB-supported lending on job creation and investments were larger for smaller and younger firms. Moreover, we find evidence that longer maturities and more advantageous loan pricing are associated with larger employment and investment effects, while no larger impact is observed for larger loan volumes. Overall, the results suggest that benefits of the EIB support are rather observed on an intensive, rather than on an extensive, margin. |
| Keywords: | SMEs, EIB, intermediated loans, impact assessment, conditional treatment effects, difference-in- differences. |
| JEL: | G38 G21 G23 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1006&r= |
| By: | Wan-Chien Chiua; Juan Ignacio Pe\~na; Chih-Wei Wang |
| Abstract: | This paper proposes a new measure of tail risk spillover. The empirical application provides evidence of significant volatility and tail risk spillovers from the financial sector to many real economy sectors in the U.S. economy in the period from 2001 to 2011. These spillovers increase in crisis periods. The conditional coexceedance in a given sector is positively related to its amount of debt financing, and negatively related to its relative valuation and investment. Real economy sectors which require substantial external financing, and whose value and investment activity are relatively lower, are prime candidates for depreciation in the wake of crisis in the financial sector. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.02263&r= |
| By: | Sergio Mayordomo; Maria Rodriguez-Moreno; Juan Ignacio Pe\~na |
| Abstract: | Foreign exchange and credit derivatives increase the bank's contributions to systemic risk. Interest rate derivatives decrease it. The proportion of non-performing loans over total loans and the leverage ratio have stronger impact on systemic risk than derivatives holdings. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.02254&r= |
| By: | Borowiecki, Karol (Department of Economics); Dzieliński, Michał (Stockholm Business School); Tepper, Alexander (Columbia University United States) |
| Abstract: | The reasons for the Great Crash and why it occurred at that particular time are still debated among economic historians. We contribute to this debate by building on a new model developed by Adrian et al. (2021), which provides a measure of the financial system's potential for financial crises. The evidence suggests that a tightening of margin requirements in the first nine months of 1929 combined with price declines in September and early October caused enough many investors to become constrained that the market was tipped into instability, triggering the sudden crash of October and November. |
| Keywords: | Leverage; financial crisis; stability ratio; great crash |
| JEL: | G01 G10 N22 |
| Date: | 2022–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2022_001&r= |
| By: | David Schoenherr (Princeton University); Jan Starmans (Stockholm School of Economics) |
| Abstract: | We examine how creditor protection affects firms with different levels of owners’ and man- agers’ personal costs of bankruptcy. Theoretically, we show that firms with high personal costs of bankruptcy borrow and invest more under a more debtor-friendly management stay system, whereas firms with low personal costs of bankruptcy borrow and invest more under a more creditor-friendly receivership system. Intuitively, stronger creditor protection relaxes financial constraints but reduces credit demand. Which effect dominates depends on owners’ and managers’ personal costs of bankruptcy. Empirically, we find support for these predictions using a Korean bankruptcy reform, which replaced receivership with management stay. |
| Keywords: | Bankruptcy, personal costs of bankruptcy, investment, law and economics |
| JEL: | G31 G32 G33 G38 K22 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-43&r= |
| By: | Ruben Tarne (Macroeconomic Policy Institute IMK and Faculty of economics and Business, University of Groningen); Dirk Bezemer; Thomas Theobald (Macroeconomic Policy Institute IMK) |
| Abstract: | This paper analyses the effects of borrower-specific credit constraints on macroeconomic outcomes in an agent-based housing market model, calibrated using U.K. household survey data. We apply different Loan-to-Value (LTV) caps for different types of agents: first-time-buyers, second and subsequent buyers, and buy-to-let investors. We then analyse the outcomes on household debt, wealth inequality and consumption volatility. The households' consumption function, in the model, incorporates a wealth term and income-dependent marginal propensities to consume. These characteristics cause the consumption-to-income ratios to move procyclically with the housing cycle. In line with the empirical literature, LTV caps in the model are overall effective while generating (distributional) side effects. Depending on the specification, we find that borrower-specific LTV caps affect household debt, wealth inequality and consumption volatility differently, mediated by changes in the housing market transaction patterns of the model. Restricting investors' access to credit leads to substantial reductions in debt, wealth inequality and consumption volatility. Limiting first-time and subsequent buyers produces only weak effects on household debt and consumption volatility, while limiting first-time buyers even increases wealth inequality. Hence, our findings emphasise the importance of applying borrower-specific macroprudential policies and, specifically, support a policy approach of primarily restraining buy-to-let investors' access to credit. |
| Keywords: | Agent-based modeling, Macroprudential regulation, Household indebtedness, Housing market, Wealth inequality |
| JEL: | G51 E58 C63 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:212-2021&r= |
| By: | Greg Kaplan (University of Chicago and NBER); Giovanni L. Violante (Princeton University) |
| Abstract: | We conduct a systematic analysis of heterogeneous agent consumption-saving models to understand whether and how they can generate a large average marginal propensity to consume (MPC). One-asset models without ex-ante heterogeneity feature a trade-off between a high average MPC and a realistic level of aggregate wealth. One-asset models with additional heterogeneity in preferences or rates of return, or behavioral features, can generate high MPCs with the right amount of total wealth, but at the cost of an excessively polarized wealth distribution that understates the wealth held by households in the middle of the distribution. Two-asset models that include both liquid and illiquid assets can resolve these trade-offs without ex-ante heterogeneity or behavioral elements, although these additional features can improve the fit of the model in other dimensions. Across all models, the share and type of hand-to-mouth households is the most important factor that determines the level of the average MPC. |
| Keywords: | Borrowing Constraints, Consumption, Income Risk, Hand-to-Mouth, Heterogeneity, Liquidity, Marginal Propensity to Consume, Market Incompleteness, Wealth Distribution |
| JEL: | D15 D31 D52 E21 E62 E71 G51 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2021-9&r= |
| By: | Francesco Ferrante; Nils Gornemann |
| Abstract: | We study the aggregate and re-distributive effects of currency devaluations in a small open economy heterogeneous households model with leverage-constrained banks. Our framework captures three stylized facts about liability dollarization in emerging economies: i) banks and firms borrow in foreign currency; ii) households save in dollar-denominated local bank deposits; and iii) such deposits are mainly held by wealthier households. The resulting currency mismatch causes an erosion of banks' net worth during a devaluation, depressing credit supply. The ensuing macroeconomic downturn is amplified by a strong reduction of consumption among poorer households in response to rising borrowing costs and falling labor income. Richer households are partially insured, as they are holding a larger share of their wealth in foreign currency denominated assets. We show that a larger currency hedging by wealthier households deepens the recession and amplifies the negative spillovers for poorer agents. When deposit dollarization is high, welfare gains can arise if monetary policy dampens a depreciation. |
| Keywords: | Dollarization; Currency Depreciation; Household Heterogeneity; Redistribution |
| JEL: | E21 F32 F41 |
| Date: | 2022–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1336&r= |
| By: | Boris Hofmann; Nikhil Patel; Steve Pak Yeung Wu |
| Abstract: | Many emerging markets (EMs) have graduated from "original sin" and are able to borrow from abroad in their local currency. Using a two-country model, this paper shows that the shift from foreign currency to local currency external borrowing does not eliminate the vulnerability of EMs to foreign financial shocks but instead results in "original sin redux" (Carstens and Shin (2019)). Even under local currency borrowing from foreign lenders, a monetary tightening abroad is propagated to EM financial conditions through a tightening of foreign lenders' financial constraints. Moreover, local currency borrowing does not eliminate currency mismatches, but shifts them from the balance sheets of EM borrowers to the balance sheets of financially constrained global lenders, so that amplifying financial effects of exchange rate fluctuations remain. We provide empirical evidence in line with this prediction of the model using data on currency composition of external debt of emerging and advanced economies. Our model-based analysis further suggests that foreign exchange intervention and capital flow management measures can mitigate the adverse effects of capital flow swings in the short run and that a larger domestic investor base can reduce the vulnerability to such swings in the longer run. |
| Keywords: | emerging market, capital flows, exchange rate, currency mismatch. |
| JEL: | E3 E5 F3 F4 F6 G1 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1004&r= |
| By: | Nina Boyarchenko; Giovanni Favara; Moritz Schularick |
| Abstract: | This paper reviews literature on the empirical relationship between vulnerabilities in the financial system and the macroeconomy, and how monetary policy affects that connection. Financial vulnerabilities build up over time, with both risk appetite and risk taking rising during economic expansions. To some extent, financial crises are predictable and have severe real economic consequences when they occur. Empirically it is difficult to link monetary policy to financial vulnerabilities, in part because financial cycles have long durations, making it difficult to separate effects of changes in monetary policy from other business cycle effects. |
| Keywords: | Monetary Policy; Financial Stability; Financial Crises; Credit; Leverage; Liquidity; Asset Prices |
| JEL: | E44 E52 E58 G20 |
| Date: | 2022–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2022-06&r= |
| By: | Mehdi El Herradi (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Aurélien Leroy (UB - Université de Bordeaux) |
| Abstract: | This paper examines the distributional effects of monetary policy in 12 OECD economies between 1920 and 2016. We exploit the implications of the macroeconomic policy trilemma with an external instrument approach to analyze how top income shares respond to monetary policy shocks. The results indicate that monetary tightening strongly decreases the share of national income held by the top 1 percent and vice versa for a monetary expansion, irrespective of the position of the economy. This effect (i) holds for the top percentile and the ultrarich (top 0.1 percent and 0.01 percent income shares), while (ii) it does not necessarily induce a decrease in income inequality when considering the entire income distribution. Our findings also suggest that the effect of monetary policy on top income shares is likely to be channeled via real asset returns. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03513433&r= |
| By: | Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Timothy Tiggeloven (VU - Vrije Universiteit Amsterdam [Amsterdam]); Daniel Lincke (Global Climate Forum e.V.); Elco Koks (VU - Vrije Universiteit Amsterdam [Amsterdam]); Philip Ward (VU - Vrije Universiteit Amsterdam [Amsterdam]); Jochen Hinkel (Global Climate Forum e.V.) |
| Abstract: | There is increasing concern among financial regulators that changes in the distribution and frequency of extreme weather events induced by climate change could pose a threat to global financial stability. We assess this risk, for the case of floods, by developping a simple model of the propagation of climate-induced shocks through financial networks. We show that the magnitude of global risks is determined by the interplay between the exposure of countries to climate-related natural hazards and their financial leverage. Climate change induces a shift in the distribution of impacts towards high-income countries and thus larger amplification of impacts as the financial sectors of high-income countries are more leveraged. Conversely, high-income countries are more exposed to financial shocks. In high-end climate scenarios, this could lead to the emergence of systemic risk as total impacts become commensurate with the capital of the banking sectors of countries that are hubs of the global financial network. Adaptation policy, or the lack thereof, appears to be one of the key risk drivers as it determines the future exposure of high-income coun |
| Keywords: | Financial Stability,Climate Impacts,Flood Risks |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03523343&r= |