Abstract
Our paper aims at describing the links between green finance and sustainable development in the light of the environmental threats and natural disasters represented by the recent coronavirus pandemic caused by the COVID-19 virus. The recent situation heavily impacted on the financial and banking system and transformed the way it has functioned before. Moreover, it demonstrated that the banking system is more vulnerable than it should be. The banking sector has shown little capacity to absorb unexpected risks, owing to far-reaching international financial reforms. There are indications that some banks are on the verge of collapse, while some non-bank financial institutions and markets need immediate support. A decade after the financial crisis, the world is still struggling with the problems posed by the events of 2007–2009. Moreover, decisions taken during the crisis increased the risk that pandemic financial stress would develop into a banking crisis over time. Our paper shows that now there is a need for the creation of healthy environment marked by the carbon-free and environmentally-friendly approaches, and the green finance might help us to achieve that goal. Our results make it clear that by promoting such instruments as green bonds, green loans and green mortgages stakeholders and policy-makers might help to create a more sustainable future for the people, their natural environment, and the economy as a whole. © 2021. All Rights Reserved.
Highlights
A sustainable financial system is one that creates and transacts financial assets which shape real prosperity in a way that serves the interests of people, the environment, and the economy as a whole, not just the rich
Given the large amount of capital needed to mitigate the effects of climate change and reduce global greenhouse gas emissions, the need for climate finance is more urgent than ever
The successful transition to a low-carbon economy requires partnerships that can successfully structure their products, that can absorb a commitment to climate finance
Summary
Citation: Streimikiene, D., Kaftan, V. (2021). Green finance and the economic threats during COVID-19 pandemic. Terra Economicus 19(2): 105–113. DOI: 10.18522/2073-66062021-19-2-105-113 Our paper aims at describing the links between green finance and sustainable development in the light of the environmental threats and natural disasters represented by the recent coronavirus pandemic caused by the COVID-19 virus. The recent situation heavily impacted on the financial and banking system and transformed the way it has functioned before. Moreover, it demonstrated that the banking system is more vulnerable than it should be. The banking sector has shown little capacity to absorb unexpected risks, owing to far-reaching international financial reforms. There are indications that some banks are on the verge of collapse, while some non-bank financial institutions and markets need immediate support. A decade after the financial crisis, the world is still struggling with the problems posed by the events of 2007–2009. Moreover, decisions taken during the crisis increased the risk that pandemic financial stress would develop into a banking crisis over time. Our paper shows that now there is a need for the creation of healthy environment marked by the carbon-free and environmentallyfriendly approaches, and the green finance might help us to achieve that goal. Our results make it clear that by promoting such instruments as green bonds, green loans and green mortgages stakeholders and policy-makers might help to create a more sustainable future for the people, their natural environment, and the economy as a whole. Keywords: green finance; economic systems; sustainable development; institutional change; COVID-19; banking and finance
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