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Dynamic spillover connectedness among green finance and policy uncertainty: Evidence from QVAR network approach

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  • Wang, Jialu
  • Mishra, Shekhar
  • Sharif, Arshian
  • Chen, Huangen

Abstract

In today's economic era, green finance is playing a crucial role in addressing tenacious environmental challenges and sustainable development. Owing to its crucial role in sustainable development, it becomes imperative to explore and understand the factors that may influence the current state of green finance in today's economic era. The policy uncertainties may significantly influence sustainable finance through the channel of investment decisions, market stability, and transition towards a sustainable economy. Owing to this fact, the present paper explores the linkage between green finance indices and policy uncertainties in terms of economic, monetary, and climate policy uncertainty. We employ the novel Quantile Spillover approach proposed by Chatziantoniou et al. (2021) on the monthly data from January 2013 to December 2022. The empirical analysis indicates a significant influence of economic and monetary policy uncertainty on green finance indices compared to climate policy uncertainty. However, all three uncertainty indices are observed to be net influencers on green finance indices. The outcome derived from the present paper holds significance for policymakers, regulators, and investors to make robust policy decisions, select well-informed strategic investment choices, and ensure market stability and sustainable development.

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  • Wang, Jialu & Mishra, Shekhar & Sharif, Arshian & Chen, Huangen, 2024. "Dynamic spillover connectedness among green finance and policy uncertainty: Evidence from QVAR network approach," Energy Economics, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:eneeco:v:131:y:2024:i:c:s0140988324000380
    DOI: 10.1016/j.eneco.2024.107330
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    3. Banerjee, Ameet Kumar & Özer, Zeynep Sueda & Rahman, Molla Ramizur & Sensoy, Ahmet, 2024. "How does the time-varying dynamics of spillover between clean and brown energy ETFs change with the intervention of climate risk and climate policy uncertainty?," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 442-468.

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