Climate change and banking sector (in)stability in Kenya: A vulnerability assessment

Arbeitspapier

This paper offers a climate change vulnerability assessment of the Kenyan banking sector by examining the time-varying linkages of climate risk drivers, economic sectors that get impacted by a disorderly low-carbon transition (climate policy relevant sectors (CPRSs)), and banking sector stability. We use temperature and precipitation climate data, identify 5 CPRSs and their quarterly outputs, construct a banking sector stability index, and examine the time-varying linkages of these variables. Effectively, we assess the response of banking sector stability to sectoral output shocks arising from physical and transition risks. Three important findings emerge: First, the agriculture sector is the sole channel of physical climate risk transmission. Second, manufacturing and utilities sectors are becoming increasingly critical/significant channels for transmitting transition risks. Third, during the COVID-19 era, all CPRSs have become increasingly linked to banking sector stability, effectively exacerbating the transmission of climate risks to the banking sector.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: KBA Centre for Research on Financial Markets and Policy Working Paper Series ; No. 66

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: climate change ; climate risk drivers ; climate policy relevant sectors (CPRS) ; banking sector ; stability

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kimundi, Gillian ; Wambui, Reuben
• Ereignis: Veröffentlichung
• (wer): Kenya Bankers Association (KBA)
• (wo): Nairobi
• (wann): 2023

Weitere Informationen

• Handle: http://hdl.handle.net/10419/271527