Analysis of the Impact of Climate Change on Financial Risk

Abstract

Climate is widely recognized as a significant source of financial risk. The high frequency of natural disasters leads to asset losses, which negatively affect financial stability. Climate change is a significant factor driving financial risks, and the increasing pace of climate-related risks affects the efficiency of financial markets. The Republic of Moldova should pay greater attention to the risks posed by climate change. This paper analyzes the impact of climate change on financial risks. We examine the mechanism through which climate change affects financial stability from a market economy perspective, thereby enriching existing research with a detailed analysis of financial risk. Climate change risks should be integrated into monetary and fiscal policies, and counter-cyclical adjustments for climate-induced financial risks need to be considered. At the same time, maintaining open financial markets under low-risk conditions can enhance the Republic of Moldova's financial security. The study is based on the results of a bibliometric analysis and consolidates theoretical and empirical literature on the information related to the impact of climate change on financial risks. The results provide a foundation for future analysis of climate change disclosures, taking into account the most recent developments in standards and frameworks. JEL: M40, M41, M49, Q54, Q56