An Apocalypse Foretold: Climate Shocks and Sovereign Defaults

Cevik, Serhan; Jalles, João Tovar

doi:10.1007/s11079-021-09624-8

Cited by 14 publications

(4 citation statements)

References 46 publications

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“…Physical risks include acute risks related to specific extreme weather events and chronic risks from long‐term gradual and structural changes in climate. Research shows that the main transmission channels from physical risk to financial risk consist of a decrease in revenues due to reductions in production capacity, supply chain interruptions and growth in operating costs such as repairing uninsured damage, inflation in raw materials or the impact on the workforce (BCBS, 2021a; Bolton et al., 2020; Cevik & Jalles, 2022; Huang et al., 2022; NGFS, 2019).…”

Section: Resultsmentioning

confidence: 99%

Climate‐related credit risk: Rethinking the credit risk framework

Redondo,

Aracil

2024

Global Policy

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Climate change and the challenges associated with the transition to a zero‐carbon economy pose significant financial risks. Climate‐related risks (CRR) indirectly impact banks through their loan portfolios. To examine the integration of CRR into banks' credit risk assessment and monitoring, this article reviews academic and institutional literature using quantitative bibliometric techniques and content analysis of 145 academic documents from policymakers and financial supervisors. A framework emerges that incorporates CRR into credit risk management. We find four thematic areas in the literature: CRR drivers, CRR tools, CRR data and CRR pricing. Overall, uncertainty, non‐linearity, geographic and industrial dependency and non‐reversibility of CRR difficult climate‐related credit risk assessment. Moreover, CRR data present comparability, availability and reliability issues, which Artificial Intelligence can improve. Finally, evidence reveals that current financial prices do not fully reflect CRR. Our findings provide important implications to policymakers for assessing ex‐ante the financial impacts of climate transition regulations, the potential for prudential regulatory action, and the need for supra‐national policies that facilitate access to reliable and comparable climate data.

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Section: Resultsmentioning

confidence: 99%

Climate‐related credit risk: Rethinking the credit risk framework

Redondo,

Aracil

2024

Global Policy

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“…An integrative literature review is suitable where the subject matter is brand new, massively disruptive, and needs further exploration. The exponential growth in global debt and the impending sovereign debt defaults (Cevik & Jalles, 2022), render the potentially apocalyptic situation worth investigating to find appropriate solutions that help prevent global economic chaos and achieve sustainability, inclusivity, and economic stability. To accomplish this, we need to draw (Raheman, 2022).…”

Section: Methodsmentioning

confidence: 99%

Harvesting, Tokenizing, and Sharing the Influence of Planetary Abundance to Mitigate the Global Debt Catastrophe

Raheman

2024

TEL

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The global debt crisis of mega proportions is heading towards the collapse of our economic systems. Posing as one of the existential threats to humanity, the perpetually increasing debt/GDP ratio projected to rise to 1300% by 2030 has no cure unless a radical new approach replaces or complements our current scarcity-focused, centralization-prone economic approaches. One such approach evolved from the 2008 economic crisis that resulted in the birth of a technology that made decentralization of any ecosystem free of human biases and prejudices. Hailed as the greatest advancement since the invention of the internet, blockchain is a liberating force of the digital age and a potential enabler of the 21 st -century sharing economy (Sharonomics) that transforms scarcity-centered legacy economic systems to one of abundance. Tokenizing that planetary abundance to offset the massive global debt may be a utopian dream at the present time but by applying the law of accelerating returns to the technology advancements of this century, a credible path can be hypothesized and pursued. The principle aim of this research is to provide theoretical support to such a hypothesis suggesting future research avenues towards a possible solution. The research methodology follows the narrative and integrative literature review approach based on peer-reviewed reports.

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“…More recently, Cevik and Jalles (2020;2021;2022) show that climate change has significant effects on government bond yields and spreads, the probability of sovereign debt default, especially in developing countries, and sovereign credit ratings. In a similar vein, Bansal et al (2016) and IMF (2020) find that the risk of climate change-as proxied by temperature rises-has a negative effect on asset valuations, while Bernstein and others (2019) show that real estate exposed to the physical risk of sea level rise sell at a discount relative to otherwise similar unexposed properties.…”

Section: A Brief Overview Of the Literaturementioning

confidence: 99%

“…2 The global annual average surface temperature has already increased by about 1.1 degrees Celsius (°C) compared with the preindustrial average during 1850-1900, amplifying the frequency and severity of climate shocks across the world. These extreme weather events are projected to intensify over the next century, as the global mean temperature increase by as much as 4°C over the next century (IPCC 2007(IPCC , 2014(IPCC , 20192021;Stern 2007). The economic consequences of climate change-ranging from financial and fiscal stability to long-run growth prospects and income distribution-will be felt across the world, but the extent of potential vulnerability depends on the size and composition of economies, the resilience of institutions and physical infrastructure, and the capacity for mitigation and adaption to climate change.…”

Section: Introductionmentioning

confidence: 99%

For Whom the Bell Tolls: Climate Change and Inequality

Cevik¹,

Jalles²

2022

IMF Working Papers

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For Whom the Bell Tolls: Climate Change and Inequality Prepared by Serhan Cevik and João Tovar Jalles 1 Authorized for distribution by Alfredo Cuevas May 2022 IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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An Apocalypse Foretold: Climate Shocks and Sovereign Defaults

Cited by 14 publications

References 46 publications

Climate‐related credit risk: Rethinking the credit risk framework

Climate‐related credit risk: Rethinking the credit risk framework

Harvesting, Tokenizing, and Sharing the Influence of Planetary Abundance to Mitigate the Global Debt Catastrophe

For Whom the Bell Tolls: Climate Change and Inequality

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