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Greening capital requirements

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  • Dafermos, Yannis
  • van Lerven, Frank
  • Nikolaidi, Maria

Abstract

Capital requirements play a central role in financial regulation and have significant implications for financial stability and credit allocation. However, in their existing form, they fail to capture environment-related financial risks and act as a barrier to the transition to an environmentally sustainable economy. This paper considers how capital requirements can become green and explores how green differentiated capital requirements (GDCRs) can be incorporated into financial regulation frameworks.

Suggested Citation

  • Dafermos, Yannis & van Lerven, Frank & Nikolaidi, Maria, 2022. "Greening capital requirements," LSE Research Online Documents on Economics 116946, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:116946
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    File URL: http://eprints.lse.ac.uk/116946/
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    References listed on IDEAS

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    Cited by:

    1. Skyrman, Viktor, 2024. "Industrial policy, progressive derisking, and the financing of Europe's green transition," Working Papers 78, Austrian Foundation for Development Research (ÖFSE).
    2. Yannis Dafermos, 2023. "Towards a climate just financial system," Working Papers 259, Department of Economics, SOAS University of London, UK.
    3. Lagoarde-Ségot, Thomas & Revelli, Christophe, 2023. "Ecological money and finance. Introducing ecological risk-free assets," International Review of Financial Analysis, Elsevier, vol. 90(C).

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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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