Climate risk and financial stability: the mediating effect of green credit

The paper explores the relationship between climate risk, financial stability (FS), and green credit's mitigating role. It presents a theoretical framework for how climate risks can affect the economy and organizations. Using European regional and global FS indicators, the study finds a strong link between financial stability, climate risk, and the adoption of green financing. It emphasizes the potential of green credit to reduce financial sector climate risks, supporting sustainable finance discussions and highlighting the importance of eco-friendly financial practices for addressing climate concerns and promoting financial and environmental sustainability.