Professor Yongbin Lv, the deputy director of the base, Professor Zhisheng Li, the director of the base, and Yichen Guo, a PhD student from the School of Finance at Zhongnan University of Economics and Law, published a collaborative paper titled "Moving Forward Against the Wind: Typhoon Disasters and Bank Risk Behaviors" in the first issue of 2024 (total 523 issues) of Financial Research , which is identified as a class A journal by the school's academic journals.

Abstract：Typhoons, as extreme weather events with high intensity and frequency, not only cause huge damage to economic activities but also have a strong impact on the financial sector, triggering a series of chain reactions and feedback behaviors. This paper uses typhoon events from 2010 to 2019 as a natural experiment, selects 295 local commercial banks as research subjects, matches the operating data of 3,452 A-share listed companies, and constructs urban-level typhoon damage indicators using the wind field model to explore the impact of typhoon disasters on bank risk behaviors from the perspective of enterprise operations. The study finds that typhoon disasters significantly increase the risk of bank credit defaults and prompt banks to increase their risk-taking levels. Mechanism analysis shows that typhoon disasters reduce enterprise production efficiency and cause losses to enterprise fixed assets, which in turn leads to an increase in the risk of credit defaults for local banks. Further analysis indicates that the transmission process of typhoon disasters affecting financial institutions is not unilateral. The increase in bank credit default risk reduces banks' risk appetite, leading to more cautious credit decisions, which are transmitted to the enterprise level, resulting in increased financing costs for enterprises and ultimately amplifying the impact of typhoon disasters on the entire economic and financial activities. This paper provides new empirical evidence for bank climate risk management.

Keywords:  Typhoon Disaster; Bank Risk Behavior; Production Efficiency; Loss of Assets; Financing Constraints

Link：http://www.jryj.org.cn/CN/Y2024/V523/I1/19

Author profile

Yongbin Lv, professor, doctoral supervisor, Deputy Dean of School of Finance, Zhongnan University of Economics and Law, Deputy Director of Innovation and Talent Base for Digital Technology and Finance. Research interests: Digital finance, climate finance, inclusive finance.

Zhisheng Li, professor, PhD supervisor, Vice President of Southwestern University of Finance and Economics, Director of Innovation and Talent Base for Digital Technology and Finance. Research interests: Financial innovation, financial risk management, market microstructure, regional financial development.

Yichen Guo, PhD candidate at the School of Finance, Zhongnan University of Economics and Law. Research interests: Climate finance.