The E-axes Forum on Climate Change, Macroeconomics, and Finance

Hyeyoon Jung, Michael Barnett

“U.S. Banks’ Exposures to Climate Transition Risks”

Young Scholars' Webinar on Climate Finance and Economics

From the Abstract: We find that banks’ credit exposures to transition risks are modest. We build on the estimated sectoral effects of climate transition policies from general equilibrium models. Even when we consider the strictest policies or the most adverse scenarios, exposures do not exceed 14 percent of banks’ loan portfolios. We also find that commonly used carbon emissions can explain at most 60 percent of bank exposures estimated off general equilibrium models. Moreover, we find evidence of bank management of transition risk exposures. Banks that signed the Net-Zero Alliance have reduced their exposures compared to non-signatories, mainly by cutting lending to the riskiest industries.

Moderator:

Michael Barnett
Assistant Professor of Finance, W. P. Carey School of Business, Arizona State University

Organizing Committee

Michael Barnett, Arizona State University
Diego Kaenzig, Northwestern University
Alissa Kleinnijenhuis, Cornell University
Parinitha Sastry , Columbia University
Ishita Sen, Harvard University

Hyeyoon Jung

Hyeyoon Jung is a Financial Research Economist at the Federal Reserve Bank of New York. Her research interests lie in international finance, financial intermediation, asset pricing, and climate finance. Her primary research interests regard understanding the impact of frictions in financial intermediaries on asset prices and real economies. Hyeyoon holds a Ph.D. in Finance from NYU Stern, B.S. in Economics from UPenn Wharton, and B.AS from UPenn School of Engineering and Applied Science. Prior to graduate school, she worked as an FX & Rates trader at J.P. Morgan.

Paper and slides

US Banks' Exposure to Climate Transition Risk

US Banks' Exposure to Climate Transition Risk

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