WORKING PAPER Don’t Lead Me This Way: Central Bank Guidance in the

This study examines the communication strategies of the European Central Bank (ECB) regarding climate change and investigates the potential impact of the ECB's perception of climate change on financial market actors. [...] We then use panel quantile regression to isolate the impacts of an increase in ECB communication on the topic of climate change on the expected probability of default for 168 firms (proxied by their CDS spread returns). [...] 6 Figure 1: Schematic View of the Chain of Transmission from ECB Communication on Climate Change to its Impacts Note: This figure illustrates the chain of transmission from ECB communication on the topic labeled "Climate Change" to its impacts on the financial system. [...] The size of each word denotes the probability of occurrence in the given topic (i.e., the larger, the more important). [...] Therefore, the increasing communication of the ECB on the topic of climate change has no impact on investors’ expectations of firms’ probability of default in the medium term.