The role of climate change in sovereign credit risk spillovers? Evidence from G20 countries

  • Chang Liu
  • , Yiran Shen*
  • , Xiaolei Sun
  • , Haiying Zhang*
  • *Corresponding author for this work

Research output: Contribution to journalConference articlepeer-review

Abstract

This study investigates sovereign credit risk spillovers in G20 countries, emphasizing the impact of climate policy uncertainty using DY spillover index framework and GARCH-MIDAS model. Empirical results show Mexico, Brazil and South Africa as primary transmitters, with the G7 countries as net receivers. We find an inverse relationship between climate uncertainty and sovereign CDS spillovers, particularly affecting highly integrated G20 countries. These results highlight the need to incorporate climate policy into risk management.

Original languageEnglish
Pages (from-to)1008-1014
Number of pages7
JournalProcedia Computer Science
Volume242
DOIs
StatePublished - 2024
Externally publishedYes
Event11th International Conference on Information Technology and Quantitative Management, ITQM 2024 - Bucharest, Romania
Duration: 23 Aug 202425 Aug 2024

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

  1. SDG 13 - Climate Action
    SDG 13 Climate Action

Keywords

  • GARCH-Midas model
  • climate policy uncertainty
  • sovereign credit risk

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