Climate Risks and Financial Markets

This chapter discusses the impact of climate risks on the financial stability of Chinese banks, drawing on research conducted by Zhang et al. (2024). Despite the absence of formal inclusion of climate risks in the policy framework of Chinese authorities, there is a growing interest among financial regulators and central banks in this subject, attributed to China's extensive geographical reach, exposure to diverse climate challenges, and its explicit commitment to achieving carbon neutrality by 2060. The impact of green transition policy and the role of interbank competition are also discussed within the scope of Zhang et al. (2024), providing further policy implications to assist regulators in formulating effective measures to manage climate risks and uphold financial stability.