Finance: Fee ONLY Swansea University PhD Scholarship: The relationship between extreme weather events and corporate default risk

Swansea University

About the Project

Funding providers: Swansea University’s School of Management

Subject areas: Finance

Project start date: 

  • 1 October 2023 (Enrolment open from mid-September)

Project supervisors:

Aligned programme of study: PhD in Finance

Mode of study: Full-time / Part-time

Project description: 

Globally, policymakers are giving greater consideration to the threats that climate change may present to the economy and businesses. One potential pathway is the rise in extreme weather events. Hurricanes, wildfires, and other natural disasters may cause damage and economic disruptions that spread to businesses, particularly small, regional businesses right in the “eye” of the storm. There has been several studies to date that have examined the impact of extreme weather events on firm performance and raising of capital but the impact on corporate distress has not been studied.

Many improvements have been made in the previous 50 years to our understanding of corporate default risk. The use of accounting- and market-based models to forecast the likelihood of corporate default risk was invented by Altman in 1968. In a recent paper, Altman et al. (2017) discovered that the Z-score performs better in the prediction of financial distress risk (FDR) than hazard- and market-based models. The question of whether extreme weather risk is connected to FDR, however, remains unanswered. The first research question would be to identify whether FDR of firms is related to extreme weather events.

A recent study (Javadi and Al-Masum, 2021) finds that banks increase the cost of loans when lending to firms with higher exposure to climate risk. This is related to banks perceiving these loans to be higher risk. However, there is a lot of variability in climate risk and banks’ exposure to firms with high exposure to climate risk places those banks at risk of financial distress. Another related research question could be to examine the relationship between bank distress and loan exposure to extreme weather events/climate risk.


  • Altman et al (2017), Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman’s Z-Score Model, Journal of International Financial Management & Accounting 28:2
  • Javaid and Al-Masum (2021), The impact of climate change on the cost of bank loans, Journal of Corporate Finance, 69


Candidates must normally hold an undergraduate degree at 2.1 level and a master’s degree with a minimum overall grade at ‘Merit’. Alternatively, applicants with a UK first class honours degree (or Non-UK equivalent as defined by Swansea University) not holding a master’s degree, will be considered on an individual basis. 

English Language requirements: If applicable – IELTS 6.5 overall (with at least 6.5 in each individual component) or Swansea recognised equivalent.

Due to funding restrictions, this scholarship is open to applicants eligible to pay tuition fees at the UK rate only, as defined by UKCISA regulations

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