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Social funding of green financing: An application of distributed ledger technologies

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  • Naoyuki Yoshino
  • Tim Schloesser
  • Farhad Taghizadeh‐Hesary

Abstract

Technical developments in the sphere of distributed ledger technologies (DLTs) provide the opportunity to enhance existing tools of social funding. In a first step, we elaborate their application to the community‐based hometown investment trust (HIT) fund, which provides financing for small‐scale renewable energy projects. In a second step, we model the investment decision problem of households to illustrate through which channel the use of DLTs impacts the household's behaviour. Our model captures the return–risk trade‐off between two forms of investments for households with different risk preferences. It reveals that the use of DLTs can mitigate the associated risk of an investment in a HIT fund causing more risk‐averse households to change their investment behaviour. Although our theoretical analysis ascertains the potentials of DLTs to enhance social funding schemes, it also works out challenges for the establishment of DLT based funds.

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  • Naoyuki Yoshino & Tim Schloesser & Farhad Taghizadeh‐Hesary, 2021. "Social funding of green financing: An application of distributed ledger technologies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6060-6073, October.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:4:p:6060-6073
    DOI: 10.1002/ijfe.2108
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    2. Yu, Huaying & Wei, Wei & Li, Jinhe & Li, Ying, 2022. "The impact of green digital finance on energy resources and climate change mitigation in carbon neutrality: Case of 60 economies," Resources Policy, Elsevier, vol. 79(C).
    3. Lin, Boqiang & Li, Minyang, 2024. "Micro Mechanisms Driving China's Clean Energy Flourish: Business Expansion and Financing," International Review of Financial Analysis, Elsevier, vol. 92(C).
    4. Rizwan Ahmed & Fatima Yusuf & Maria Ishaque, 2024. "Green bonds as a bridge to the UN sustainable development goals on environment: A climate change empirical investigation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2428-2451, April.
    5. Wang, Shuguang & Sun, Luang & Iqbal, Sajid, 2022. "Green financing role on renewable energy dependence and energy transition in E7 economies," Renewable Energy, Elsevier, vol. 200(C), pages 1561-1572.

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