Rogue Waves: Climate Change and Firm Performance

May 27, 2022

Preview Citation

Format: Chicago

Serhan Cevik, and Fedor Miryugin. Rogue Waves: Climate Change and Firm Performance, (USA: International Monetary Fund, 2022) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Climate change is an existential threat to the global economy and financial markets. There is a large body of literature documenting potential macroeconomic consequences of climate change, but firm-level empirical research on how climate change affects the performance of firms remains scarce. This paper aims to close this gap by empirically investigating the impact of climate change vulnerability on corporate performance using a large panel dataset of more than 3.3 million nonfinancial firms from 24 developing countries over the period 1997–2019. We find that nonfinancial firms operating in countries with greater vulnerability to climate change tend to experience difficulty in access to debt financing even at higher interest rates, while being less productive and profitable relative to firms in countries with lower vulnerability to climate change. We confirm these findings with alternative measures of climate change vulnerability. Furthermore, partitioning the sample reveals that these effects are significantly greater for smaller firms, especially in high-risk sectors and countries and countries with weaker capacity to adapt to and mitigate the consequences of climate change.

Subject: Climate change, Environment, Natural disasters

Keywords: Climate change, Climate change vulnerability, Consequences of climate change, Corporate performance, Firm performance, Global, Natural disasters, Nonfinancial firm, Nonfinancial firms, Sector peer

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/102
Stock No:

WPIEA2022102
ISBN:

9798400208171
ISSN:

1018-5941

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