Impact Assessment of Climate Change on Financial Market Resilience: Evidence From China
ABSTRACT Climate change has emerged as a major threat to global financial stability, as increasingly frequent extreme weather events damage ecosystems and disrupt economic activity. In China, climate change exacerbates regional risks; affects agriculture, infrastructure, and local economies; and increases volatility in financial markets. This study employs double machine learning to explore how climate change affects China's financial market resilience. Findings reveal that climate change undermines China's financial market resilience for 1–3 years, notably within stock, bond, and foreign exchange markets. This study further reveals that climate change further weakens market resilience by reducing enterprise output, tightening credit, and increasing government regulatory costs. Moreover, our findings suggest that the development of green finance and digital finance acts as a crucial buffer against climate‐related shocks and contributes to greater market stability. This study offers theoretical support for policymakers seeking to address climate risks and strengthen the resilience of financial markets.
Authors
- L Wang
- Jie Zhou (ORCID: https://orcid.org/0000-0002-9018-3140)
- Zidan Luo
Institutions
- Jiangnan University (CN)
Publication Details
- Journal
- Business Strategy and the Environment
- Published
- 2026-04-27
- DOI
- https://doi.org/10.1002/bse.70816
- Primary Topic
- Sustainable Finance and Green Bonds
- Type
- article
- Field-Weighted Citation Impact
- 0.00