ISSN 2096-2533

CN 42-1881/F



  • 当期目录


发布时间:2023-09-28作者:郭琨 边源 张大永 姬强浏览次数:106


The Impact of Climate-Related Risk on Local Government

Financing Costs

Guo Kun, Bian Yuan, Zhang Dayong, Ji Qiang


AbstractWith increasing public attention towards global warming and climate changeclimate risk has become an important factor in asset pricing. Frequent climate disasters and climate policy uncertainty have landed local government debt financing in a dilemma. From the perspective of Chengtou bondswe try to figure out the impact of climate risk on the financing cost of local governments. We find that climate risk significantly increases the issuance spread of Chengtou bondsleading to the rise of local government financing costsand this effect is the result of the joint action of climate physical risk and climate transition risk. Further analysis shows that voluntary environmental information disclosure and higher external ratings can weaken the negative effect of climate risk on local government financing. The main mechanism is that in this way information asymmetry would be relieved and the validation role of the market on environmental information would be enhanced. We believe that Chengtou bondswhich are important capital sources for urban constructionare always featured with high pollution and energy consumption. The increasingly severe effect of climate risk on their issuance costs will further worsen the implicit debt burden of local governments. Thereforelocal governments should be more proactive in voluntary environmental information disclosure to cope with climate risk.

KeywordsClimate Risk; Local Government Financing Costs; Environmental Information Disclosure; Chengtou Bonds



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