TY - JOUR
T1 - The contagion effects and network analysis of climate-related risk events
T2 - Global and regional evidence
AU - Hsiao, Cody Yu Ling
AU - Yang, Rui
AU - Chiu, Yi Bin
AU - Chui, Chin Man
N1 - Publisher Copyright:
© 2025 The Authors.
PY - 2025/12
Y1 - 2025/12
N2 - This paper examines the impact of 2009–22 climate-related risk events on five major economic sectors in various regions and markets. Employing the multiple-dependence contagion test, we develop a risk sensitivity index and network analysis to quantify the intensity and direction of risk transmission within the financial system. The findings reveal that transition risk events (e.g., the Glasgow Climate Pact) generate stronger contagion effects than do physical risk events (e.g., European heatwaves). Among economic sectors, Financials exhibit the highest vulnerability, followed by Energy, with Utilities the least affected. Developed markets experience greater exposure to climate risks than do emerging markets, with European sectors being the most impacted, followed by the Americas, with Asia being the least affected. Network analysis identifies Industrials, Financials, and Energy as the primary transmitters of climate risk shocks. Overall, this study has important policy implications for financial stability, risk management, and climate resilience.
AB - This paper examines the impact of 2009–22 climate-related risk events on five major economic sectors in various regions and markets. Employing the multiple-dependence contagion test, we develop a risk sensitivity index and network analysis to quantify the intensity and direction of risk transmission within the financial system. The findings reveal that transition risk events (e.g., the Glasgow Climate Pact) generate stronger contagion effects than do physical risk events (e.g., European heatwaves). Among economic sectors, Financials exhibit the highest vulnerability, followed by Energy, with Utilities the least affected. Developed markets experience greater exposure to climate risks than do emerging markets, with European sectors being the most impacted, followed by the Americas, with Asia being the least affected. Network analysis identifies Industrials, Financials, and Energy as the primary transmitters of climate risk shocks. Overall, this study has important policy implications for financial stability, risk management, and climate resilience.
KW - Climate change
KW - Contagion
KW - Network analysis
KW - Stock return
UR - https://www.scopus.com/pages/publications/105021033031
U2 - 10.1016/j.iref.2025.104730
DO - 10.1016/j.iref.2025.104730
M3 - Article
AN - SCOPUS:105021033031
SN - 1059-0560
VL - 104
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
M1 - 104730
ER -