When faced with reality : how extreme weather events influence bank lending

Pavlič, Domen (author), Volk, Matjaž (author), Marinč, Matej (author)

We combine precise geolocation data on firms with detailed loan-level information to examine how an extreme weather event influences banks’ perceptions of climate-related risks. We focus on the severe flooding that occurred in Slovenia in August 2023 and analyse changes in the borrowing terms offered to firms situated in flood-prone areas that were not directly affected by the disaster. We find that banks revise their assessment of climate risk following the flood, as evidenced by tighter lending conditions for exposed firms. Specifically, high-risk firms experience a decline in outstanding loan amounts and an increase in borrowing costs. We also find some evidence that the impact is more pronounced for loans with short maturity and no collateral and less pronounced for firms with a relationship with a single bank.

• Language: English
• Keywords: climate change, risk management, banking policy, bank lending, floods, borrowing conditions, climate risks, extreme weather events
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2026
• Number of pages: 22 str.
• Numbering: Vol. 81, art. 103148
• PID: 20.500.12556/RUL-179571
• UDC: 336.71
• ISSN on article: 0275-5319
• DOI: 10.1016/j.ribaf.2025.103148
• COBISS.SI-ID: 251455491
• Publication date in RUL: 17.02.2026

Record is a part of a journal

• Title: Research in international business and finance
• Shortened title: Res. int. bus. financ.
• Publisher: Elsevier
• ISSN: 0275-5319
• COBISS.SI-ID: 512590361

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: podnebne spremembe, obvladovanje tveganj, bančna politika

Projects

• Funder: ARIS - Slovenian Research and Innovation Agency
• Project number: P5-0161
• Name: Izzivi vlagateljev, podjetij, finančnih institucij in države v negotovem evropskem gospodarskem okolju