Banking Sector Exposures to Climate Risks : Overview of Transition Risks in the Hungarian Corporate Loan Portfolio

Ritter, Renátó (2022) Banking Sector Exposures to Climate Risks : Overview of Transition Risks in the Hungarian Corporate Loan Portfolio. FINANCIAL AND ECONOMIC REVIEW, 21 (1). pp. 32-55. ISSN 2415-9271 (print); 2415–928X (online)

Preview

Text fer-21-1-st2-ritter.pdf Download (700kB) | Preview

Abstract

Risks arising from climate change can have a serious impact on the operation of the financial system. In this study, the credit exposures of banks and bank branches operating in Hungary are assessed using two methodologies. To put the results of the analysis into context, they are compared with the results of the survey conducted by the European Banking Authority using the same methodologies. Based on both methodologies, Hungarian institutions may be exposed to the negative effects of climate change at a higher rate than their counterparts in the European Union. Using the two methods together, risk groups were formed, on the basis of which 1.2 per cent of Hungarian institutions were classified in the upper quartile and more than 55 per cent of the banking system was classified in the upper-middle quartile. The methods presented can help not only assess the banking system’s transition exposures at the systemic level, they can also be used to assess corporate credit exposures at the institutional level.

Actions (login required)

Edit Item