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Updated: May 22, 2026
06:10
Using Generative Art to Convey Past and Future Climate Transitions
Published on: March 31, 2023
How climate change shapes global systemic risk transmission: A complex network approach
1School of Finance and Economics, Henan Polytechnic University, Jiaozuo, Henan, China.
Plos One
|May 20, 2026
Summary
Climate change performance significantly impacts global financial markets, amplifying systemic risks. However, strong climate governance acts as a crucial buffer against extreme market volatility and risk contagion.
Area of Science:
- Environmental Finance
- Climate Economics
- Financial Stability
Background:
- Extreme tail risk transmission poses systemic threats to global financial markets.
- Climate change performance is increasingly recognized as a factor influencing financial stability.
- Existing models often fail to capture the complex dynamics of risk contagion.
Purpose of the Study:
- To investigate the dynamic impact of climate change performance on extreme tail risk transmission.
- To quantify the domino effect of tail risk propagation using a novel network model.
- To assess how climate governance modulates financial risk contagion pathways.
Main Methods:
- Utilized a cascading failure network model incorporating QRNN-∆CoVaR and QRNN-∆CoES.
- Employed daily market data (1998-2024) and Climate Change Performance Index data (2007-2024).
- Applied a matched time window approach for data alignment and analysis.
Main Results:
- Climate-sensitive factors significantly amplify systemic vulnerabilities.
- Superior climate governance demonstrably buffers against extreme volatility and risk contagion.
- Significant spatial and temporal heterogeneity in risk contribution was observed, particularly during financial crises.
Conclusions:
- Climate change performance is a critical determinant of global financial stability.
- The proposed nonlinear framework accurately quantifies systemic risks, outperforming traditional linear methods.
- This research offers a robust tool for climate-integrated financial stability monitoring.
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