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.

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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
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article

Impact Assessment of Climate Change on Financial Market Resilience: Evidence From China

L Wang, Jie Zhou, Zidan Luo
Business Strategy and the Environment
Sustainable Finance and Green Bonds
article

Impact Assessment of Climate Change on Financial Market Resilience: Evidence From China

L Wang, Jie Zhou, Zidan Luo
article en

Abstract

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.

Business Strategy and the Environment
Jiangnan University (CN)
Climate action
Openalex Percentile: Top 4%
Sustainable Finance and Green Bonds
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Impact Assessment of Climate Change on Financial Market Resilience: Evidence From China — L Wang, Jie Zhou, et al. · Business Strategy and the Environment (2026) | TGRS Research Map | TGRS