02068cas a2200325 a 4500 AALejournalIMF022287 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513590219 1018-5941 BD-DhAAL BD-DhAAL Huang, Bihong. Do Banks Price Environmental Transition Risks? : Evidence from a Quasi-Natural Experiment in a Chinese Province / Bihong Huang, Maria Teresa Punzi, Yu Wu. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (48 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper assesses the financial risks arising from transition toward a low-emission economy. The environmental DSGE model shows tightening environmental regulation impairs firms' balance sheets, and consequently threatens financial stability in the short term. The empirical analysis indicates that following the implmentation of Clean Air Action Plan, the default rates of high-polluting firms in a Chinese province rose by around 80 percent. Joint equity commercial banks with higher level of independence were able to appropriately price in their exposure to transition risks, while the Big Five commercial banks failed to factor in such risks. Mode of access: Internet Business Fluctuations imf Cycles imf Energy and the Macroeconomy imf Monetary Policy, Central Banking, and the Supply of Money imf Taxation and Subsidies imf Punzi, Maria Teresa. Wu, Yu. IMF Working Papers; Working Paper ; No. 2021/228 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/228/001.2021.issue-228-en.xml IMF e-Library