Climate Risk Shock and the "Accelerator" Effect of Credit Financing Contraction

Abstract

Based on data from China's Annual Survey of Industrial Firms (2004–2013), this paper constructs a unique climate risk index to examine the impact of climate risk shocks on corporate credit financing. The results show that exogenous climate risk shocks trigger a "financial accelerator" effect, significantly suppressing corporate credit financing, especially for firms highly dependent on bank credit. Mechanism analysis reveals that climate risk primarily suppresses credit financing by reducing industrial output and sales revenue, and accelerating collateral depreciation. Heterogeneity analysis shows ownership and industry heterogeneity, while financial deepening helps mitigate the negative impact. Decision-makers should pay attention to the "financial accelerator" effect of climate risk, promote enterprises' climate resilience, optimize financial structures, and create a more favorable financing environment.