<abstract xmlns="http://www.w3.org/1999/xhtml">
<p>Climate change and environmental constraints are the biggest challenges facing the economy and society. Because they influence price and financial stability, controversial or trade-off decisions are sometimes required. In recent years, we have observed an increasing interest concerning central banks’ role in addressing these issues and supporting green finance development. This article proposes to evidence the impact of central banks’ climate change discourse on financial stability at the European banking level, considering their role in financial stability. We employed an event study methodology on systemic risk measures computed for 181 banks listed on European stock exchanges, using daily observations for 2015-2021. On the other side, we identified speeches of European central bank governors related to their involvement in climate change policy. The empirical results confirm the assumption that participation by central banks generally has positive effects on financial stability and some concrete measures were visible. While central banks cannot make climate policy and are not the critical element in this area, along with other economic, financial and governmental institutions, they can play an important role.</p>
</abstract>

Climate change and environmental constraints are the biggest challenges facing the economy and society. Because they influence price and financial stability, controversial or trade-off decisions are sometimes required. In recent years, we have observed an increasing interest concerning central banks’ role in addressing these issues and supporting green finance development. This article proposes to evidence the impact of central banks’ climate change discourse on financial stability at the European banking level, considering their role in financial stability. We employed an event study methodology on systemic risk measures computed for 181 banks listed on European stock exchanges, using daily observations for 2015-2021. On the other side, we identified speeches of European central bank governors related to their involvement in climate change policy. The empirical results confirm the assumption that participation by central banks generally has positive effects on financial stability and some concrete measures were visible. While central banks cannot make climate policy and are not the critical element in this area, along with other economic, financial and governmental institutions, they can play an important role.

Climate Change in the Discourse of Central Banks. Influence on Financial Stability at the European Level

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Climate change and environmental constraints are the biggest challenges facing the economy and society. Because they influence price and financial stability,...

Climate Change in the Discourse of Central Banks. Influence on Financial Stability at the European Level

Published Online: Sep 20, 2023

Page range: 235 - 246

DOI: https://doi.org/10.2478/sbe-2023-0034

Keywords
climate change, central banks, financial stability, event-study

© 2023 Iulia Lupu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Climate Change in the Discourse of Central Banks. Influence on Financial Stability at the European Level

Published Online: Sep 20, 2023

Page range: 235 - 246

DOI: https://doi.org/10.2478/sbe-2023-0034

Keywordsclimate change, central banks, financial stability, event-study

© 2023 Iulia Lupu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
climate change, central banks, financial stability, event-study