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<p>Climate change presents a severe challenge to the operation of rural commercial banks. Employing the panel data of rural commercial banks in China, this study delves into the impact of climate change on bank risk-taking behavior and explores the underlying mechanisms. We note that (1) extreme climate events significantly increase the risk-taking level of rural commercial banks; (2) the agricultural natural risk mechanism and agricultural market risk channel are validated; (3) heterogeneity analysis shows that high temperatures and extreme precipitation have a greater impact on banks in monsoon regions, while those in non-monsoon regions are more affected by low temperatures. Moreover, extreme temperatures and precipitation are significant factors in both non-grain and grain areas. Additionally, long-term temperature variations induce a passive increase in the risk-taking level. These findings provide valuable insights for rural commercial banks to better address climate risks and for central banks to implement targeted measures to enhance banking stability.</p>

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Will climate change exacerbate the risks of China’s rural commercial banks?

  • 期刊论文

  • 发表日期：

    2026年2月28日

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  • Tianyue Pei,
  • Xuesheng Chen,
  • Yujie Li,
  • Shuo Wang

摘要

Climate change presents a severe challenge to the operation of rural commercial banks. Employing the panel data of rural commercial banks in China, this study delves into the impact of climate change on bank risk-taking behavior and explores the underlying mechanisms. We note that (1) extreme climate events significantly increase the risk-taking level of rural commercial banks; (2) the agricultural natural risk mechanism and agricultural market risk channel are validated; (3) heterogeneity analysis shows that high temperatures and extreme precipitation have a greater impact on banks in monsoon regions, while those in non-monsoon regions are more affected by low temperatures. Moreover, extreme temperatures and precipitation are significant factors in both non-grain and grain areas. Additionally, long-term temperature variations induce a passive increase in the risk-taking level. These findings provide valuable insights for rural commercial banks to better address climate risks and for central banks to implement targeted measures to enhance banking stability.