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In this paper we use a novel approach to address issues of endogeneity in estimating a causal effect of leverage on risk taking by banks. Using data on local bank office deposits and local unemployment we construct an instrument to use in a regression of leverage on a measure of risk taking constructed from new issuance of loans. The results (i.) confirm that due to limited liability banks increase their risk taking after an exogenous increase in leverage, and (ii.) that an increase in deposit supply has a direct positive effect on risk taking by banks. The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.

Theme: Data, methods and approaches in Climate Change Adaptation and Disaster Risk Reduction Sub-Theme: Integrating methods and tools for disaster risk and adaptation, Economic evaluation of risks and responses Format: Oral Communication

This deliverable aims to present the methods employed, tools used, results, and presents conclusions of the participatory process carried out at island level in SOCLIMPACTto propose, rank and evaluate alternativeadaptation pathways to face climate change impacts.A framework was set for a presential consultation method but with the arrival of the COVID-19 pandemic context major adjustments had to be made to what was originally proposed. The Adaptation pathways rational and concept is presented explaining how the sector adaptation pathways were designed, how the proposed Adaptation Options were assembled in classes of adaptation and how Adaptation Policy Trajectories (APTs) were used as context to develop alternative adaptation pathways. The development and characterization of those Adaptation Options is explained, putting forward how these policy options were gathered at European level and then traduced and characterized to the island level.&nbsp

SOCLIMPACT improves a climate change risk assessment, helping islands to identify their climate change related risks or to test their existing risk management strategies under climate change and therefore identify sectorial challenges where new strategies are needed. Following these steps, the SOCLIMPACT project will operationalize with a modelling chain between WP4-WP5 and WP6 the outputs of WP3: some relevant impact chains, selected after each step of WP3 will be modelized. o A first step of risk screening allows sector leaders to conduct a desk-top study and screen the climate change-related exposure of each sector using readily available datasets, which are registered in the D3.3 and D3.4. o A second step risk assessment takes a standard risk-based approach using national data, local information and expert knowledge in order to formalize some theoretical impact chains. o A third step (detailed) risk assessment process allows sector leaders and islands focal points to further investigate short-listed impact chains and provides support to prioritise sectors and/or sub-risks.

In this report a set of indicators is proposed for summarizing objectives and providing up-to-date information on the impacts of climate change, the state-of-the-environment and societal conditions of islands. These indicators are meant to support a practical description. They can be used for identifying policy goals, defining strategies, monitoring and evaluating implemented actions. They are also useful for communicating the environmental and societal conditions to a particular audience, such as local stakeholders, administrations, general public, policymakers from local to national levels. Finally, they provide a synthetic way to describe multiple aspects of the state of environment, natural resources assets and related human activities including socio-economic factors. These indicators are based on environmental data, models, oceanographic and meteorological observations, and administrative archives. They are based on several parameters including physical, chemical or biological measures associated with environmental quality or natural resources, information on processes and interventions, economical values, members describing the composition and characteristics of societies and of their needs. The indicators are focused on the four sectors addressed by SOCLIMPACT and strictly linked to the identified impact chains. They allow:  To compare conditions among islands  To identify critical situations  To identify trends and evolution of conditions leading to risks  To monitor risks  To monitor the results of management strategies