Efficiency of Low-Carbon Finance: Its Interrelationships with Industry and Macroeconomic Environment

Jorge Antunes, Abdollah Hadi-Vencheh, Ali Jamshidi, Yong Tan () and Peter Wanke
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Jorge Antunes: Federal University of Rio de Janeiro, Rua Paschoal Lemme
Abdollah Hadi-Vencheh: Isfahan (Khorasgan) Branch, Islamic Azad University
Ali Jamshidi: Isfahan (Khorasgan) Branch, Islamic Azad University
Yong Tan: University of Bradford
Peter Wanke: Federal University of Rio de Janeiro, Rua Paschoal Lemme

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 193, 15328-15364

Abstract: Abstract This study contributes to the literature by addressing the relevance of low-carbon finance efficiency and making significant contributions. We employ a simple weighted linear programming (LP) approach to estimate efficiency and compute entity scores with minimal optimization background, enhancing accessibility. Our study investigates interrelationships among the factors of production and outputs in estimating the efficiency of low-carbon finance, including financial index (renewable energy investment), renewable electricity output, renewable production, financial risk index, GDP, and research and development expenses, using the stochastic structural relationship programming (SSRP) model. Analyzing China, India, Brazil, and the USA, our findings show that China and the USA outperform other countries in low-carbon finance efficiency. This sheds light on comparative performance and variations across different contexts. A minimal initial overall renewable production plays an important role for the countries with lower financial indices to improve, while those with high indices should increase their focus on the energy sector. We identify a spillover effect of renewable production on financial index and financial risk index, emphasizing the positive relationship between renewable energy investments and overall financial outcomes. Integrating renewable energy initiatives into financial strategies brings potential benefits. This study significantly contributes to the literature on low-carbon finance efficiency, offering vital policy implications for sustainable finance and renewable energy sectors.

Keywords: Low-carbon finance; Linear programming (LP); Carbon emission (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01658-2

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