Finance Research Seminar – Dr Nikolaos Papanikolaou
Title: Bank Credit Risk and Biodiversity
Date: 11 February 2026
Time: 12:00-13:00
Venue: FDC.1.16
If you would like to attend, please register using the following link
Bank Credit Risk and Biodiversity
Speaker: Dr Nikolaos Papanikolaou
Dr Nikolaos Papanikolaou joined Newcastle University in October 2020 as a Senior Lecturer in Finance. He hold various academic positions at the University of Glasgow, University of Bath, and University College London (UCL). He formerly served as a Senior Lecturer in Accounting and Finance at Bournemouth University and, before that, as Assistant Professor of Banking and Finance at the University of Sussex. He has also held the posts of Post-doc researcher and Lecturer at the University of Luxembourg as well as visiting academic positions at Stern School of Business at New York University in US, the Department of Economics at the University of Illinois in US, and the Department of Banking and Finance at Chulalongkorn University in Thailand. His research has been published in a number of highly-ranked academic journals (Journal of Banking and Finance; Journal of Financial Stability; Journal of Financial Services Research; Financial Markets, Institutions & Instruments; Business Strategy and the Environment; Economics Letters; European Journal of Finance, etc.). He has presented his research in numerous prestigious conferences and other high-impact events.
Abstract:
Biodiversity has become a critical topic in sustainable finance, reflecting increasing regulatory and stakeholder pressure on financial institutions to address nature-related risks. This paper explores the relationship between banks’ biodiversity-related activities and credit risk by analysing both disclosure narratives and institutional actions. Employing GPT-4 to perform sentence-level sentiment analysis of biodiversity-related disclosures in banks’ annual reports, we assess the tone of communication concerning biodiversity. In this context, we develop a composite Biodiversity Conservation Actions Index based on banks’ operational practices and strategic commitments related to biodiversity. Our findings indicate that banks’ biodiversity-related disclosures are positively associated with actual loan quality and lower short-term expected credit risk. However, when negative sentiment predominates over positive sentiment in these disclosures, banks tend to demonstrate higher actual loan quality alongside increased long-term expected credit risk. Furthermore, biodiversity-related actions are consistently associated with reduced credit risk from both backward-looking and forward-looking perspectives.