IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v15y2024i3d10.1007_s13132-023-01658-2.html
   My bibliography  Save this article

Efficiency of Low-Carbon Finance: Its Interrelationships with Industry and Macroeconomic Environment

Author

Listed:
  • Jorge Antunes

    (Federal University of Rio de Janeiro, Rua Paschoal Lemme)

  • Abdollah Hadi-Vencheh

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

  • Ali Jamshidi

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

  • Yong Tan

    (University of Bradford)

  • Peter Wanke

    (Federal University of Rio de Janeiro, Rua Paschoal Lemme)

Abstract

This study contributes to the literature by addressing the relevance of low-carbon finance efficiency and making significant contributions. We employ a simple weighted linear programming (LP) approach to estimate efficiency and compute entity scores with minimal optimization background, enhancing accessibility. Our study investigates interrelationships among the factors of production and outputs in estimating the efficiency of low-carbon finance, including financial index (renewable energy investment), renewable electricity output, renewable production, financial risk index, GDP, and research and development expenses, using the stochastic structural relationship programming (SSRP) model. Analyzing China, India, Brazil, and the USA, our findings show that China and the USA outperform other countries in low-carbon finance efficiency. This sheds light on comparative performance and variations across different contexts. A minimal initial overall renewable production plays an important role for the countries with lower financial indices to improve, while those with high indices should increase their focus on the energy sector. We identify a spillover effect of renewable production on financial index and financial risk index, emphasizing the positive relationship between renewable energy investments and overall financial outcomes. Integrating renewable energy initiatives into financial strategies brings potential benefits. This study significantly contributes to the literature on low-carbon finance efficiency, offering vital policy implications for sustainable finance and renewable energy sectors.

Suggested Citation

  • Jorge Antunes & Abdollah Hadi-Vencheh & Ali Jamshidi & Yong Tan & Peter Wanke, 2024. "Efficiency of Low-Carbon Finance: Its Interrelationships with Industry and Macroeconomic Environment," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 15328-15364, September.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:3:d:10.1007_s13132-023-01658-2
    DOI: 10.1007/s13132-023-01658-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-023-01658-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-023-01658-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Coulomb, Renaud & Henriet, Fanny, 2018. "The Grey Paradox: How fossil-fuel owners can benefit from carbon taxation," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 206-223.
    2. Mullen, Katharine M. & Ardia, David & Gil, David L. & Windover, Donald & Cline, James, 2011. "DEoptim: An R Package for Global Optimization by Differential Evolution," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 40(i06).
    3. Hatefi, S.M. & Torabi, S.A., 2010. "A common weight MCDA-DEA approach to construct composite indicators," Ecological Economics, Elsevier, vol. 70(1), pages 114-120, November.
    4. Hadrien Hainaut & Ian Cochran, 2018. "The Landscape of domestic climate investment and finance flows: Methodological lessons from five years of application in France," International Economics, CEPII research center, issue 155, pages 69-83.
    5. Zeqiraj, Veton & Sohag, Kazi & Soytas, Ugur, 2020. "Stock market development and low-carbon economy: The role of innovation and renewable energy," Energy Economics, Elsevier, vol. 91(C).
    6. Yixi Ning & Wei Wang & Bo Yu, 2015. "The driving forces of venture capital investments," Small Business Economics, Springer, vol. 44(2), pages 315-344, February.
    7. Best, Rohan & Burke, Paul J., 2018. "Adoption of solar and wind energy: The roles of carbon pricing and aggregate policy support," Energy Policy, Elsevier, vol. 118(C), pages 404-417.
    8. Ghosh, Amit, 2015. "Banking-industry specific and regional economic determinants of non-performing loans: Evidence from US states," Journal of Financial Stability, Elsevier, vol. 20(C), pages 93-104.
    9. Acheampong, Alex O., 2018. "Economic growth, CO2 emissions and energy consumption: What causes what and where?," Energy Economics, Elsevier, vol. 74(C), pages 677-692.
    10. Ohler, Adrienne & Fetters, Ian, 2014. "The causal relationship between renewable electricity generation and GDP growth: A study of energy sources," Energy Economics, Elsevier, vol. 43(C), pages 125-139.
    11. Lin, Boqiang & Xu, Mengmeng, 2019. "Good subsidies or bad subsidies? Evidence from low-carbon transition in China's metallurgical industry," Energy Economics, Elsevier, vol. 83(C), pages 52-60.
    12. Magnani, Natalia & Vaona, Andrea, 2013. "Regional spillover effects of renewable energy generation in Italy," Energy Policy, Elsevier, vol. 56(C), pages 663-671.
    13. Carraro, Carlo & Favero, Alice & Massetti, Emanuele, 2012. "“Investments and public finance in a green, low carbon, economy”," Energy Economics, Elsevier, vol. 34(S1), pages 15-28.
    14. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    15. Campiglio, Emanuele, 2016. "Beyond carbon pricing: The role of banking and monetary policy in financing the transition to a low-carbon economy," Ecological Economics, Elsevier, vol. 121(C), pages 220-230.
    16. Jaakkola, Niko, 2019. "Carbon taxation, OPEC and the end of oil," Journal of Environmental Economics and Management, Elsevier, vol. 94(C), pages 101-117.
    17. Maria Rosaria Guarini & Fabrizio Battisti & Anthea Chiovitti, 2018. "A Methodology for the Selection of Multi-Criteria Decision Analysis Methods in Real Estate and Land Management Processes," Sustainability, MDPI, vol. 10(2), pages 1-28, February.
    18. Tian, Jinfang & Yu, Longguang & Xue, Rui & Zhuang, Shan & Shan, Yuli, 2022. "Global low-carbon energy transition in the post-COVID-19 era," Applied Energy, Elsevier, vol. 307(C).
    19. Zhu Liu & Dabo Guan & Douglas Crawford-Brown & Qiang Zhang & Kebin He & Jianguo Liu, 2013. "A low-carbon road map for China," Nature, Nature, vol. 500(7461), pages 143-145, August.
    20. Thomas Gries & Manfred Kraft & Daniel Meierrieks, 2011. "Financial deepening, trade openness and economic growth in Latin America and the Caribbean," Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4729-4739.
    21. Rui Wang & Jiangtao Liu & Hang(Robin) Luo, 2021. "Fintech development and bank risk taking in China," The European Journal of Finance, Taylor & Francis Journals, vol. 27(4-5), pages 397-418, March.
    22. Ferrer, Román & Shahzad, Syed Jawad Hussain & López, Raquel & Jareño, Francisco, 2018. "Time and frequency dynamics of connectedness between renewable energy stocks and crude oil prices," Energy Economics, Elsevier, vol. 76(C), pages 1-20.
    23. Yamazaki, Akio, 2017. "Jobs and climate policy: Evidence from British Columbia's revenue-neutral carbon tax," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 197-216.
    24. Abbas, Jawad & Wang, Lisu & Ben Belgacem, Samira & Pawar, Puja Sunil & Najam, Hina & Abbas, Jaffar, 2023. "Investment in renewable energy and electricity output: Role of green finance, environmental tax, and geopolitical risk: Empirical evidence from China," Energy, Elsevier, vol. 269(C).
    25. Cui, Lianbiao & Li, Rongjing & Song, Malin & Zhu, Lei, 2019. "Can China achieve its 2030 energy development targets by fulfilling carbon intensity reduction commitments?," Energy Economics, Elsevier, vol. 83(C), pages 61-73.
    26. Li, Menghan & Hamawandy, Nawzad Majeed & Wahid, Fazle & Rjoub, Husam & Bao, Zongke, 2021. "Renewable energy resources investment and green finance: Evidence from China," Resources Policy, Elsevier, vol. 74(C).
    27. P. Zhou & B. Ang, 2009. "Comparing MCDA Aggregation Methods in Constructing Composite Indicators Using the Shannon-Spearman Measure," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 94(1), pages 83-96, October.
    28. Hanson, Donald & Laitner, John A. Skip, 2004. "An integrated analysis of policies that increase investments in advanced energy-efficient/low-carbon technologies," Energy Economics, Elsevier, vol. 26(4), pages 739-755, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohsin, Muhammad & Taghizadeh-Hesary, Farhad & Panthamit, Nisit & Anwar, Saba & Abbas, Qaiser & Vo, Xuan Vinh, 2021. "Developing Low Carbon Finance Index: Evidence From Developed and Developing Economies," Finance Research Letters, Elsevier, vol. 43(C).
    2. Sharma, Rajesh & Shahbaz, Muhammad & Sinha, Avik & Vo, Xuan Vinh, 2021. "Examining the temporal impact of stock market development on carbon intensity: Evidence from South Asian countries," MPRA Paper 108925, University Library of Munich, Germany, revised 2021.
    3. Gao, Ming, 2023. "The impacts of carbon trading policy on China's low-carbon economy based on county-level perspectives," Energy Policy, Elsevier, vol. 175(C).
    4. Zhou, P. & Wang, M., 2016. "Carbon dioxide emissions allocation: A review," Ecological Economics, Elsevier, vol. 125(C), pages 47-59.
    5. Zhang, Hai-Ying & Ji, Qiang & Fan, Ying, 2013. "An evaluation framework for oil import security based on the supply chain with a case study focused on China," Energy Economics, Elsevier, vol. 38(C), pages 87-95.
    6. Wei, Yu & Zhang, Jiahao & Chen, Yongfei & Wang, Yizhi, 2022. "The impacts of El Niño-southern oscillation on renewable energy stock markets: Evidence from quantile perspective," Energy, Elsevier, vol. 260(C).
    7. Syed Aamir Aijaz & Grima Simon & Sood Kiran, 2024. "Assessing the Role of the Fintech Era on the Banking Stability of an Emerging Economy: Interaction Analysis of the Indian Banking Industry," Folia Oeconomica Stetinensia, Sciendo, vol. 24(1), pages 182-202.
    8. Tian, Lihui & Li, Xin & Lee, Cheng-Wen & Spulbăr, Cristi, 2024. "Investigating the asymmetric impact of artificial intelligence on renewable energy under climate policy uncertainty," Energy Economics, Elsevier, vol. 137(C).
    9. Naef, Alain, 2024. "The impossible love of fossil fuel companies for carbon taxes," Ecological Economics, Elsevier, vol. 217(C).
    10. Capucine Nobletz, 2021. "Return spillovers between green energy indexes and financial markets: a first sectoral approach," EconomiX Working Papers 2021-24, University of Paris Nanterre, EconomiX.
    11. Xiangsheng Dou & Huanying Cui, 2017. "Low-carbon society creation and socio-economic structural transition in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(5), pages 1577-1599, October.
    12. Yang Ding & Yelin Fu & Kin Keung Lai & W. K. John Leung, 2018. "Using Ranked Weights and Acceptability Analysis to Construct Composite Indicators: A Case Study of Regional Sustainable Society Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(3), pages 871-885, October.
    13. Bilgili, Faik, 2015. "Business cycle co-movements between renewables consumption and industrial production: A continuous wavelet coherence approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 325-332.
    14. Nobletz, Capucine, 2022. "Green energy indices & financial markets: An in-depth look," International Economics, Elsevier, vol. 171(C), pages 80-109.
    15. Wanke, Peter & Chen, Zhongfei & Dong, Qichen & Antunes, Jorge, 2021. "Transportation Sustainability, Macroeconomics, and Endogeneity in China: A Hybrid Neural-Markowitz-Variable Reduction Approach," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    16. Ahmed, Walid M.A., 2024. "Attention to climate change and eco-friendly financial-asset prices: A quantile ARDL approach," Energy Economics, Elsevier, vol. 136(C).
    17. Lin, Tao & Zhang, Ling & Li, Jianglong, 2024. "Coupling and coordinated development of green finance and renewable energy industry in China: Spatiotemporal differentiation and driving factors," Renewable Energy, Elsevier, vol. 235(C).
    18. Hart, Rob & Gars, Johan, 2022. "The black paradox," European Economic Review, Elsevier, vol. 148(C).
    19. Vera, Sonia & Sauma, Enzo, 2015. "Does a carbon tax make sense in countries with still a high potential for energy efficiency? Comparison between the reducing-emissions effects of carbon tax and energy efficiency measures in the Chile," Energy, Elsevier, vol. 88(C), pages 478-488.
    20. Hong, Yanran & Luo, Keyu & Xing, Xiaochao & Wang, Lu & Huynh, Luu Duc Toan, 2024. "Exchange rate movements and the energy transition," Energy Economics, Elsevier, vol. 136(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:15:y:2024:i:3:d:10.1007_s13132-023-01658-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.