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Climate Finance In The Wake Of Covid-19: Connectedness Of Clean Energy With Conventional Energy And Regional Stock Markets

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  • SITARA KARIM

    (Department of Business Administration, Faculty of Management Sciences, ILMA University, Karachi, Pakistan)

  • SHABEER KHAN

    (��Department of Islamic Economics and Finance, Sakarya University, Serdivan, Turkey‡Department of Business Administration, Sukkur IBA University, Sukkur, Pakistan)

  • NAWAZISH MIRZA

    (�Excelia Business School, La Rochelle, France)

  • SUHA M. ALAWI

    (�Department of Finance, King Abdulaziz University, Saudi Arabia)

  • FARHAD TAGHIZADEH-HESARY

    (��Tokai University, Hiratsuka-shi 259-1292, Kanagawa-ken, Japan)

Abstract

Focusing on raising climate concerns and sustaining a clean ecosystem, the current study strives to examine the connectedness of clean energy markets with conventional energy markets and four regional stock markets of Asia, Pacific, Europe, and America for the period spanning January 1, 2004 to August 31, 2021. We employed the volatility connectedness methodology using dynamic conditional correlation (DCC-GARCH) estimates for analysis purposes. There is pronounced within class connectedness of all markets except conventional energy markets, which showed strong disconnection from the network. However, strong inter-class spillovers are reported between clean energy and regional stock markets. Time-varying analysis revealed that intense spillovers are shaped during the Global Financial Crisis, Shale Oil Crisis, and COVID-19 pandemic. Meanwhile, time-varying net connectedness estimates illuminate that world renewable energy and American stock markets are net transmitters, whereas leftover markets are net recipients of spillovers. Further analysis of sub-sample periods during GFC, SOR, and COVID-19 validate that intense spillovers are formed when markets experience unexpected financial, economic, and global health turmoil. We proposed significant implications for regional stock markets of Asia, Pacific, Europe and America to concentrate on the climate-friendly energy markets than conventional energy markets as they service the clean ecosystem motives more specifically.

Suggested Citation

  • Sitara Karim & Shabeer Khan & Nawazish Mirza & Suha M. Alawi & Farhad Taghizadeh-Hesary, 2022. "Climate Finance In The Wake Of Covid-19: Connectedness Of Clean Energy With Conventional Energy And Regional Stock Markets," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 13(03), pages 1-25, August.
    • Handle: RePEc:wsi:ccexxx:v:13:y:2022:i:03:n:s2010007822400085
    DOI: 10.1142/S2010007822400085
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    Citations

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    Cited by:

    1. Naeem, Muhammad Abubakr & Yousaf, Imran & Karim, Sitara & Yarovaya, Larisa & Ali, Shoaib, 2023. "Tail-event driven NETwork dependence in emerging markets," Emerging Markets Review, Elsevier, vol. 55(C).
    2. Naeem, Muhammad Abubakr & Appiah, Michael & Karim, Sitara & Yarovaya, Larisa, 2023. "What abates environmental efficiency in African economies? Exploring the influence of infrastructure, industrialization, and innovation," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    3. Benlagha, Noureddine & Karim, Sitara & Naeem, Muhammad Abubakr & Lucey, Brian M. & Vigne, Samuel A., 2022. "Risk connectedness between energy and stock markets: Evidence from oil importing and exporting countries," Energy Economics, Elsevier, vol. 115(C).
    4. Rao, Amar & Lucey, Brian & Kumar, Satish & Lim, Weng Marc, 2023. "Do green energy markets catch cold when conventional energy markets sneeze?," Energy Economics, Elsevier, vol. 127(PA).
    5. Siddique, Md Abubakar & Nobanee, Haitham & Karim, Sitara & Naz, Farah, 2022. "Investigating the role of metal and commodity classes in overcoming resource destabilization," Resources Policy, Elsevier, vol. 79(C).
    6. Ghosh, Bikramaditya & Pham, Linh & Teplova, Tamara & Umar, Zaghum, 2023. "COVID-19 and the quantile connectedness between energy and metal markets," Energy Economics, Elsevier, vol. 117(C).
    7. Lee, Chien-Chiang & Wang, Fuhao & Chang, Yu-Fang, 2023. "Towards net-zero emissions: Can green bond policy promote green innovation and green space?," Energy Economics, Elsevier, vol. 121(C).
    8. Arfaoui, Nadia & Naeem, Muhammad Abubakr & Boubaker, Sabri & Mirza, Nawazish & Karim, Sitara, 2023. "Interdependence of clean energy and green markets with cryptocurrencies," Energy Economics, Elsevier, vol. 120(C).
    9. Choi, Gahyun & Park, Kwangyeol & Yi, Eojin & Ahn, Kwangwon, 2023. "Price fairness: Clean energy stocks and the overall market," Chaos, Solitons & Fractals, Elsevier, vol. 168(C).
    10. Huthaifa Sameeh Alqaralleh, 2024. "Analyzing Overnight Momentum Transmission: The Impact of Oil Price Volatility on Global Financial Markets," IJFS, MDPI, vol. 12(3), pages 1-23, July.
    11. Wang, Zi-Xin & Liu, Bing-Yue & Fan, Ying, 2023. "Network connectedness between China's crude oil futures and sector stock indices," Energy Economics, Elsevier, vol. 125(C).
    12. Abubakr Naeem, Muhammad & Iqbal, Najaf & Lucey, Brian M. & Karim, Sitara, 2022. "Good versus bad information transmission in the cryptocurrency market: Evidence from high-frequency data," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    13. Liu, Hui & Chau, Ka Yin & Duong, Nam Tien & Hoang, Nguyen-Khai, 2024. "Fintech, financial inclusion, mineral resources and environmental quality. An economic advancement perspective from China and Vietnam," Resources Policy, Elsevier, vol. 89(C).
    14. Yunfeng Shang & Pan Qi & Hui Chen & Qin Yang & Yuan Chen, 2023. "COVID-19 and its impact on tourism sectors: implications for green economic recovery," Economic Change and Restructuring, Springer, vol. 56(2), pages 941-958, April.
    15. Li, Wenxue & Liu, Fei, 2023. "Financing green resource generation in sub-saharan Africa: Does financial integration matter?," Resources Policy, Elsevier, vol. 85(PB).
    16. Naeem, Muhammad Abubakr & Peng, Zhe & Bouri, Elie & Hussain Shahzad, Syed Jawad & Karim, Sitara, 2022. "Examining the asymmetries between equity and commodity ETFs during COVID-19," Resources Policy, Elsevier, vol. 79(C).
    17. Naeem, Muhammad Abubakr & Nguyen, Thi Thu Ha & Karim, Sitara & Lucey, Brian M., 2023. "Extreme downside risk transmission between green cryptocurrencies and energy markets: The diversification benefits," Finance Research Letters, Elsevier, vol. 58(PA).
    18. Naeem, Muhammad Abubakr & Sadorsky, Perry & Karim, Sitara, 2023. "Sailing across climate-friendly bonds and clean energy stocks: An asymmetric analysis with the Gulf Cooperation Council Stock markets," Energy Economics, Elsevier, vol. 126(C).
    19. Li, Zhuolun, 2023. "Do geopolitical risk, green finance, and the rule of law affect the sustainable environment in China? Findings from the BARDL approach," Resources Policy, Elsevier, vol. 81(C).
    20. Chishti, Muhammad Zubair & Arfaoui, Nadia & Cheong, Calvin W.H., 2023. "Exploring the time-varying asymmetric effects of environmental regulation policies and human capital on sustainable development efficiency: A province level evidence from China," Energy Economics, Elsevier, vol. 126(C).
    21. Jin Chen & Yue Chen & Wei Zhou, 2024. "Relation exploration between clean and fossil energy markets when experiencing climate change uncertainties: substitutes or complements?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

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