Green Finance Research Articles

Green Finance, Green Innovation, and Industrial Development in Africa

The issue of promoting green industrial productivity has emerged as a pivotal concern in economic development, attracting substantial attention from scholars and policy makers alike. This study aims to scrutinize the impact of green finance on Africa's industrialisation, and further explore the potential moderating role of green innovation within the relationship between green finance and industrialisation in the African context, i.e., assessing the extent to which green innovation can influence the effect that green finance has on industrialisation. This study encompasses 41 African nations, spanning the period from 2000 to 2020. The research methodology employs the fixed effect model as proposed by Driscoll and Kraay (1998), in conjunction with the system Generalized Method of Moments (GMM) regression analysis. The results show that green finance enhances industrialization in Africa, while green innovations through renewable energy have a negative effect. Policy recommendations are discussed.

Can artificial intelligence and green finance affect economic cycles?

The COVID-19 recession and the Ukraine-Russia War (URW) crisis have added a new layer of complexity to global economic cycles, necessitating the evolution of economic systems and proactive responses to emerging economic challenges. In this context, the recent article introduces artificial intelligence (AI) as a new driver of economic cycles and analyzes its dynamic role alongside the Belt and Road Initiative (BRI), the Paris Agreement (PA), green finance (GB), and economic shocks (ES) in determining global economic cycles. The article employs novel econometric tools, namely the CAViaR-TVP-VAR model, the Quantile Coherence method, panel Quantile on Quantile Kernel-Based Regularized Least Squares (PQQKRLS), and the Quantile-Quantile Granger causality (QQGC) test for robust findings. The outcomes reveal that AI influences economic cycles in the short run while significantly mitigating these cycles in the medium and long run. Furthermore, the BRI exhibits a positive link with economic cycles during the short and medium run; however, it can contribute to economic stability in the long run by impeding economic fluctuations. Similarly, green finance and the PA show mixed influences across various time horizons, except for the long run, which confirms their negative association with economic cycles. Additionally, ES has a direct link with economic cycles across most periods. The robustness check based on the QQGC test and PQQKRLS method supports the main results. Our results identify AI, BRI, and the PA as new drivers of economic cycles with the potential to counter global economic cycles. Therefore, based on these findings, the study proposes several policy implications tailored to different time horizons.

Does green credit policy matter for corporate sustainable innovation? Evidence from China

Green finance is a powerful motivator for promoting sustainable innovation and achieving green development. Under the dual background of building a green finance system and a market-oriented green technology innovation system, this study examines the impact of the Green Credit Guidelines on the sustainable innovation of enterprises both before and after implementation. By analyzing the propensity score matching difference-in-difference (PSM-DiD) analysis of Chinese listed enterprises, we have found that the support of relevant policies actually inhibits sustainable innovation and reduces the number of sustainability-related patents. This effect is more pronounced in green credit-restricted industries, state-owned enterprises (SOEs), and eastern regions. Ultimately, we have discovered that green utility model patents, in contrast to green invention patents, are the primary indicator of the detrimental impact of green credit policy on the performance of sustainable innovation. Overall, our study broadens the understanding of the external impacts of sustainable innovation within enterprises and provides valuable insights for corporate policy makers and management professionals.

Doing good in times of need: Green finance policy and strategic corporate social responsibility

This study investigates the effect of a green finance policy on the corporate social responsibility (CSR) activities of firms in heavily polluting industries. Based on the 2017 policy of the People's Bank of China (PBC), which incorporates green finance into its macroprudential assessment system, we employ the difference-in-differences method to show that firms in heavily polluting industries have significantly improved their CSR performance after the implementation of the PBC's green finance policy. In response to the negative effect of the PBC's policy on their financial position, affected firms strategically engage in CSR activities in the hope that appearing socially responsible will help them recover from their adverse position. Furthermore, firms in heavily polluting industries that enhance their CSR performance after the PBC's policy have benefited from reduced bank credit transaction costs and have obtained more bank loans. The improvement in CSR performance is mainly concentrated in firms that are non-state-owned, small in size, highly dependent on external financing, and receiving more media attention. Overall, this study reveals a social consequence of the PBC's green finance policy on the CSR performance.

Data-driven financial models for sustainable SME growth: Integrating green finance into small and medium enterprise strategies

In recent years, the increasing urgency to address climate change and environmental degradation has prompted a shift towards sustainable business practices, particularly within the realm of small and medium enterprises (SMEs). This paper explores the integration of green finance into the strategic frameworks of SMEs, examining how financial instruments and funding mechanisms can support environmentally sustainable practices while fostering economic growth. By assessing the current landscape of green finance, including green loans, bonds, and impact investing, the study identifies barriers SMEs face in accessing these resources. It highlights successful case studies where SMEs have effectively utilized green finance to implement energy-efficient technologies, sustainable supply chains, and eco-friendly product innovations. Furthermore, the paper proposes a strategic model for SMEs to incorporate green finance into their operations, emphasizing the importance of aligning with sustainability goals, enhancing stakeholder engagement, and leveraging partnerships with financial institutions. The findings underscore that integrating green finance not only contributes to environmental sustainability but also enhances the competitive advantage and resilience of SMEs in an evolving market landscape.

Sowing the seeds of sustainability: how does green finance reform shape corporate ESG performance?

ABSTRACT In the context of rising global eco-concern, China introduced the green finance reform and innovation (GFRIs) policies to promote sustainable growth, rendering corporate ESG performance increasingly salient. This study evaluates the impact of GFRIs policies on ESG performance of Chinese listed firms from 2015 to 2022, and delves into the mechanisms of green investments, green innovation, and government environmental concern. By employing a dynamic difference-in-differences model and considering firms in GFRIs pilot zones as the treatment group, we find that: First, green finance reform can significantly enhance corporate ESG performance, and this result remains robust across various tests. Second, the impact is more pronounced among growth-stage firms, private firms, and small-scale firms, as revealed by our heterogeneity analysis. Third, the mechanism tests show that green finance reform improves corporate ESG performance by boosting green investments, fostering green innovation, and heightening local government environmental concerns. Fourth, firm executives’ attributes influence the impact of green finance reform on ESG performance, and the involvement of CPC member executives, female executives, and socially-responsible executives can positively moderate this effect. This study provides valuable insights into sound green finance strategies for developing countries by highlighting the positive impacts of green finance reforms on microeconomic outcomes.

Does the green finance policy affect the efficiency of corporate investment? Evidence from China's green finance reform and innovation pilot zones.

In the context of promoting the orderly expansion of capital investment and rational allocation of resources to achieve green and circular economic development. Green finance, as a new engine to promote the sustainability of enterprises, holds significant importance in exploring the positive effect of green finance policies on optimizing the investment decisions of enterprises and guiding them to efficiently utilize their resources to maximize value creation. Using A-share listed companies in Shanghai and Shenzhen from 2012 to 2022 as the research sample, we apply the Difference-in-Differences (DID) method to test the impact of the green finance reform and innovation pilot zones (2017) on the investment efficiency of enterprises in the pilot regions. We also adopt a two-step method to test the mechanisms of financial resource misallocation and agency costs. The study reveals that the green finance policy significantly enhances the investment efficiency of enterprises in the pilot areas. Financial resource misallocation and agency costs are important influence mechanisms. Drawing on resource allocation theory and agency theory, the study concludes that the green finance policy alleviates financial resource misallocation by directing financial resources toward high-efficiency enterprises. Moreover, the policy effectively reduces agency conflicts caused by power separation and information asymmetry, ensuring that enterprises can maximize the benefits of their investments. Heterogeneity analysis shows that non-state-owned enterprises and low-tech innovative enterprises in the pilot areas have disadvantages in terms of capital stock and loan credit, so the policy can improve their investment efficiency effectively. Based on these findings, we recommend that to leverage the positive effects of the green finance policy, it is essential to enhance the guiding role of the government, strengthen market mechanisms, and bolster corporate initiatives. This study complements the research on the economic effects of location-orientated comprehensive green finance policies on enterprises, considering the dual aspects of resource allocation efficiency and corporate governance, and makes up for the shortcomings of the existing literature. The study's conclusions offer valuable insights for enhancing green finance to support enterprises in achieving efficient production.

Factors Favoring the Adoption of Green Finance by Financial Institutions In Dakar: An Exploratory Study

As with any organization, financial institutions, particularly in Dakar, play a crucial role in low-income and emerging economies by mobilizing capital and investing in climate change mitigation. Drawing on neo-institutional theory, this exploratory study aims to understand and identify the factors that may influence the adoption of green finance by banks in Dakar. To achieve this, interviews were conducted with five (5) bank CEOs and three (3) solar energy stakeholders (bank clients), and the data were analyzed using thematic categorical content analysis. The findings, based on the interviewees’ responses, reveal that top management support, proactive institutional strategies, capacity building, incentive policies, market share development, allocation of funds to green projects, and the digitization of banking services are likely to influence the adoption of green finance by banks in Dakar. Furthermore, the direct involvement of monetary and regulatory authorities, through the development of specific regulations that encourage financial institutions to adopt green finance, is essential.

Insurer green financing for a supply chain under cap-and-trade regulation: a capped call contingent claim analysis

Insurer green financing for a supply chain under cap-and-trade regulation: a capped call contingent claim analysis

The Relationship between Technology for the Development of Green Finance and Economic Growth: A Comparison Study between Developed and Middle East Countries

The Relationship between Technology for the Development of Green Finance and Economic Growth: A Comparison Study between Developed and Middle East Countries

Higher-order moments spillovers among energy, carbon and tourism markets: Time- and frequency-domain evidence.

This paper uses the GJRSK model to estimate the high-order moments of energy (oil, natural gas, and coal), the carbon market, and tourism stocks. Then, it utilizes a novel TVP-VAR time-frequency connectedness approach to examine higher-order moments spillovers among them. The results show a strong connectedness among the three markets. The energy market is the emitter of volatility, skewness and kurtosis spillovers; tourism stock is the receiver; and the carbon market is the transmitter. From a time-domain perspective, the higher-order moments spillovers of the three markets are time-varying, especially during extreme periods, where the energy market's spillover effects on tourism stocks are significantly enhanced, indicating that tourism stocks bear a greater risk at leptokurtosis and fat-tail moment. From a frequency-domain perspective, the long-term asymmetric spillovers of oil, natural gas, and tourism markets on the carbon market are more pronounced than the short-term. Moreover, the COVID-19 pandemic exacerbated the higher-moment spillovers of energy and tourism stocks on the carbon market. Meanwhile, the Russia-Ukraine conflict led to extreme risk transmission within the energy market. These findings have significant implications for cross-industry investors and green finance risk management.

Can Green Finance Policies Slow Greenhouse Gas Emissions? Evidence from China's Manufacturing Sector

Can Green Finance Policies Slow Greenhouse Gas Emissions? Evidence from China's Manufacturing Sector

Impact of Green Banking Practices on Green CSR and Sustainability in Private Commercial Banks: The Mediating Role of Green Financing Activities

Impact of Green Banking Practices on Green CSR and Sustainability in Private Commercial Banks: The Mediating Role of Green Financing Activities

Sustainable Development in Green Finance for the Yellow River Basin

Sustainable Development in Green Finance for the Yellow River Basin

Global Research Trends in Green Finance: A Systematic Literature Review of Regional Contributions (2001-2024)

This study presents the systematic analysis of existing literature on global research trends in green finance, focusing on regional contributions from 2001 to 2024. Using data from the Web of Science and Scopus databases, this analysis identifies patterns in publication volume, regional leadership, and thematic evolution in green finance research. The findings reveal a substantial increase in scholarly output, particularly in response to climate agreements such as the Paris Agreement and the Sustainable Development Goals. Notably, countries like China, the United Kingdom, and emerging contributors, including Pakistan, are leading in research output. The study underscores a shift from foundational studies on sustainable finance to specific applications in green bonds, ESG criteria, and climate finance. Additionally, it highlights strong international co-authorship networks, especially among researchers in Europe, North America, and Asia, which facilitate cross-border collaboration and knowledge dissemination.

Evolution of Green Finance: Mapping Its Role as a Catalyst for Economic Growth and Innovation

This scientometric study analyzes the evolving landscape and outlook of green finance as a driver of economic innovation and growth, highlighting key trends and influential research within this critical field. A dataset of 371 publications was compiled from the Scopus and Web of Science databases and analyzed using VOSviewer, Bibliometrix, and Voyant tools to map the research landscape. By systematically reviewing the scientific literature, this research tracks the development of green finance’s role as a catalyst for economic innovation and growth, identifying trending topics, key studies, and major contributors through bibliometric and scientometric methods. The analysis reveals a growing interdisciplinary approach, integrating environmental, social, and political dimensions into green finance research. Keyword analysis identified three primary thematic clusters: (1) green finance and innovation, (2) economic growth, carbon neutrality, and fintech, and (3) renewable energy and urbanization. This study provides a comprehensive overview of the field and aims to guide future research while contributing to ongoing debates on the role of green finance in fostering economic innovation and sustainable growth.

Private climate investment, coal transition and digitalization in the major coal-consuming countries

This paper examines the relationship between private investment, digitalization, and coal rent in major coal-consuming countries from 1999 to 2019. Using the CS-FMOLS technique, the results show that a 1% increase in the ICT Development Index raises coal rent by 0.24%, underscoring digitalization's role in enhancing coal industry profitability. Conversely, a 1% increase in private participation in infrastructure reduces coal rent by 0.35%, as private investments focus on sustainable energy. The study concludes that while private investment supports clean energy, digitalization extends coal reliance. To support coal transition, policies should promote green ICT production, renewable energy, green finance, and good governance in sustainable projects.

Ecological and economic effects of green financing

Currently, all three components of sustainable development at all levels are becoming increasingly important to ensure the existence and development of states. This article is devoted to green finance, linking economic and environmental aspects of development. Green financing is a policy direction to reduce negative environmental externalities and attract investment in new technologies, which has become widespread in recent years; green bonds are one of its most important instruments. To assess the impact of issuing green bonds on the environmental component, represented by the equivalent of carbon monoxide emissions, the article was the first to apply a matching procedure to evaluate company data obtained using the Refinitiv database. The authors showed a model specification that supports the hypothesis that the issuance of green bonds has an impact on reducing carbon monoxide equivalent emissions in the long term, but the results of the logarithmic specification of this model turned out to be unstable. From the calculations presented in the article it follows, that despite the fact that the effect of issuing green bonds does not have an immediate impact on the company’s environmental performance, but in the long run it can improve their performance. It helps to raise environmental rating of companies and, in turn, can help attract investments for the development of technologies and infrastructure that ensure technological independence, the use of promising energy sources, the best available technologies, and the transport greening.

Tail risk transmission between decomposed oil shocks and green finance markets: evidence from an EVT–TVP–VAR approach

ABSTRACT This paper provides a novel framework based on extreme value theory, i.e. the autoregressive conditional Fréchet–time-varying parameters–vector autoregression (AcF–TVP–VAR) framework, to explore the tail risk spillovers between decomposed oil shocks (supply, demand, and risk shocks) and green finance markets. The empirical results reveal that there are significant time-varying tail risk spillovers between the two markets, with spillovers intensifying during extreme events. Additionally, throughout the sample period, supply shock is found to be a net transmitter of tail risk, while clean energy market is a net receiver. Notably, the safe haven properties of green bond market are captured, indicating it can serve as a diversified investment option. The findings are important for financial investors and policymakers.

Assessing the Environmental Impact of Green Finance, Tourism, and Globalization in Pakistan

The fast development of technology in the last several decades has created new problems for the environment. The current study evaluates how green finance, tourism, globalization, and GDP affect environmental sustainability in Pakistan during 1989 to 2022. This study utilized ARDL approach to probe the long run tie between studied variables. The empirical evidence of this study revealed that tourism, GDP and globalization deteriorate the environmental sustainability, yet green finance mitigate CO2 emissions. Policy suggestions are provided to regulate the environmental laws to control the adverse impact of globalization and tourism and to transit the economy towards green economy. The policymakers should encourage the green technology for sustainable environment.