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How does energy finance promote energy transition? Evidence from Shanghai crude oil futures

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  • Long, Houyin
  • Huang, Xiang
  • Wang, Jiaxin

Abstract

We examine the energy transition effect of Shanghai crude oil futures (SC). Using Chinese renewable energy firm-level data between 2014q1 and 2021q3, we show that SC can alleviate the inhibitory effect of global oil price fluctuations on energy transition. We further explore three potential underlying mechanisms through which the energy transition effect of SC: reducing the impact of global oil price volatility on firms' business risk, financialized investment, and debt cost. We find the energy transition effect of SC is more pronounced in samples with low-risk resistance. Our paper sheds new light on the real effects of SC on energy transition.

Suggested Citation

  • Long, Houyin & Huang, Xiang & Wang, Jiaxin, 2023. "How does energy finance promote energy transition? Evidence from Shanghai crude oil futures," International Review of Financial Analysis, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finana:v:90:y:2023:i:c:s1057521923003939
    DOI: 10.1016/j.irfa.2023.102877
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    2. Wang, Ziqi & Li, Rongrong & Kong, Qunxi, 2024. "Shanghai oil futures prices and firms' investment decisions: Evidence from Chinese manufacturing firms," Energy Economics, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Shanghai crude oil futures (SC); Global oil price volatility; Renewable energy investment;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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