Jan Janků, Tomáš Karhánek, Simona Malovaná, Ivan Trubelík
This paper examines whether chronic physical climate risk affects corporate credit allocation. We focus on drought, one of the most salient climate-related risks for the Czech economy, and combine granular AnaCredit data with district-level measures of drought-related agricultural losses. Using almost 6 million bank–firm–month observations for nearly 140,000 firms between 2019 and 2023, we show that long-term drought exposure is associated with a significant contraction in new corporate lending. The effect is concentrated at the origination margin: newly originated credit declines by about 12 percent in drought-affected regions, while outstanding credit volumes adjust more gradually. The impact varies across bank–firm relationships, credit-exposure characteristics, and sectors, consistent with banks incorporating chronic physical climate risk primarily into new lending decisions rather than immediately reducing existing exposures.
JEL Codes: E51, G21, G32, Q54
Keywords: Bank lending, Climate risk, Corporate credit, Drought, Loan origination, AnaCredit
Issued: July 2026
Download: CNB WP No. 11/2026 (pdf, 9 MB)