The Effect Of Energy Price, Commodity Index And Geopolitical Risk On Green Finance: Analyses Based On The Quantile Autoregressive Distributed Lag Approach

Abstract

It has long been established that the performance of economic sectors, including financial markets, is significantly affected by erroneous fluctuations in geopolitical circumstances, energy prices and markets. goods. In recent years, the use of green financial instruments, especially green bonds, has become increasingly popular due to the trend of greening and pursuing sustainable development. In this article, the authors study the potential relationship between green finance, energy prices and commodity markets during a volatile period of geopolitical events from 2014 to 2023. The results, which are analyzed by the QARDL model, indicate that crude oil prices and natural gas prices have a positive effect on the growth of green bonds; however, coal prices and commodity index have a negative impact in the long term. While considered in the short term, relationships tend to be the opposite to the long-run. In addition, the study discovered that the growth of green bonds is positively impacted by renewable energy and negatively impacted by the GPR index over the short term and the long term. After quantifying the impact of those factors on green bonds, the article offers some suggestions for policymakers to stimulate issuance and attract interest in green bonds and finance as well as orientations and instructions for investors when choosing this type of financial instrument for their investment portfolio.