Chronic warming cuts SME credit growth by 5.2 percentage points
French SME credit growth slows after extreme heat and sustained warming, according to Banque de France research published on October 22, 2026. Skander Maraoui and Olivier de Bandt find larger, longer-lasting reductions after chronic temperature increases.
Eight years of weaker lending
For the most severe 10 percent of acute heat exposures, SME credit growth falls by an average 4.4 percentage points for up to five years.
Equally severe chronic warming reduces growth by around 5.2 percentage points for up to eight years.
These effects compare with average annual SME lending growth in 2017-19. Acute risk measures days above 35°C; chronic risk measures deviations in annual average temperatures.
The authors link Météo-France temperatures to geolocated, single-establishment SMEs and Credit Register loans over 2010-23. Comparing similar local firms controls for demand to isolate credit supply.
Medium- and long-term loans face sharper reductions in some sectors.
Chart estimates show 95 percent confidence intervals.
Different heat across France
Against the 1976-2005 baseline, chronic warming is stronger in northern and eastern mainland France; extreme heat increases more in central and southern areas.
Trade, transport, accommodation, leisure, manufacturing and mining face both risks.
Real estate, construction and services respond more to acute heat.
Maraoui is affiliated with Université Paris-Est Créteil and de Bandt with Banque de France.
The authors identify lower profitability, greater default risk and weaker collateral values as possible channels behind lending reductions.
Ratings leave risk unmeasured
Controlling for credit ratings leaves the temperature effect virtually unchanged, indicating that ratings do not fully capture this exposure.
The authors call for granular, forward-looking portfolio assessments.
Adaptation finance offsets some risk-related restraint but does not dominate the measured net effect.