Research on the Impact of Environment and Climate Change on the Credit Risk Management System of Rural Small and Medium Banks

Against the backdrop of global climate change intensification and the advancement of China's "dual carbon" goals, rural small and medium banks, as the financial main force in serving rural revitalization, face significant impacts of climate risks on the quality of credit assets. This study takes Guangxi Rural Credit as a case study, and through empirical analysis and stress testing, discusses the impact of environment and climate change on the credit risk management system of rural small and medium banks. The research is based on credit data and meteorological disaster data from 91 rural cooperative institutions in Guangxi from 2016 to 2022, combining econometric models and machine learning methods to reveal the transmission mechanism and heterogeneity characteristics of extreme weather on agricultural credit risk. The results show that extreme low temperatures, high temperatures, and heavy precipitation significantly increase the non-performing loan ratio, with each additional day of low temperature leading to a 0.24% increase in the non-performing rate of county-level institutions; agricultural loans are more significantly affected by climate risks, and there are differences in the impact between the southern and northern regions and different agricultural structures. The study proposes strategies such as constructing a climate risk management system, optimizing loan review processes, and strengthening information disclosure, providing a scientific basis for rural financial institutions and regulatory authorities to address climate challenges.