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The Green Trilemma: Energy Efficiency, Banking Stability and Climate Risk in the ESG Context at World Level

Author

Listed:
  • Massimo Arnone

    (Unict - Università degli studi di Catania = University of Catania)

  • Angelo Leogrande

    (LUM University Giuseppe Degennaro)

Abstract

In the following article, we analyse the relationships among banking stability, the efficiency of the energy system and climate risks at a global level. We present a detailed analysis of the literature relating to the relationship between the banking system and Environmental, Social and Governance-ESG models. In our research, we try to verify whether it is possible to achieve energy efficiency, stability of the banking system and reduction of climate risk together i.e. the "Green Trilemma". The econometric analysis is conducted through the following models: Panel Data with Random Effects, Panel Data with Fixed Effects, Pooled Ordinary Least Squared and Weighted Least Squared-WLS. To estimate the variables we used World Bank data. The analysis shows that ESG growth is negatively associated with energy efficiency and positively associated with banking stability and climate risk. It therefore follows that the Green Trilemma hypothesis is rejected. Countries can only target banking stability and climate risk through ESG models.

Suggested Citation

  • Massimo Arnone & Angelo Leogrande, 2024. "The Green Trilemma: Energy Efficiency, Banking Stability and Climate Risk in the ESG Context at World Level," Working Papers hal-04606513, HAL.
    • Handle: RePEc:hal:wpaper:hal-04606513
    Note: View the original document on HAL open archive server: https://hal.science/hal-04606513
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    Keywords

    Banks Energy and the Macroeconomy Energy Forecasting Valuation of Environmental Effects Climate JEL Code: G21 Q43 Q47 Q51 Q54; Banks; Energy and the Macroeconomy; Energy Forecasting; Valuation of Environmental Effects; Climate; JEL Code: G21; Q43; Q47; Q51; Q54;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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