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March 6, 2026Finance Research OpenOpen Access

Climate Change and Sectoral Stock Price Dynamics: Empirical Evidence from an ARDL Modeling Approach

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Authors

PVPooja VermaAGArun Kumar Giri

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Overview

Empirical analysis reveals temperature changes affect stock prices short and long term, indicating investment opportunities.

Key Points

  • The study aims to analyze how temperature stress and economic factors influence India's sectoral equity indices.
  • Utilized quarterly data from 2004Q1 to 2023Q4.
  • Employed an Autoregressive Distributed Lag (ARDL) framework with bounds testing.
  • Examined the impact of temperature alongside industrial activity, inflation, and lending rates.
  • Performed cointegration analysis for eight BSE sectoral indices.
  • In the short run, temperature changes significantly lower stock prices across sectors (ranging from -3.19 to -9.29).
  • Long-term temperature increases positively impact sectoral growth (ranging from 8.67 to 26.65).
  • Temperature stress demonstrates significant price risk in sectoral equities.
  • Macroeconomic factors also affect sectoral stock prices but vary by industry.

Cite This Study

Verma et al. (2026) studied this question.

synapsesocial.com/papers/69aa7008531e4c4a9ff596echttps://doi.org/10.1016/j.finr.2026.100110
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