Correlation among climate risk, climate policy uncertainty, and carbon-intensive stock markets in China

Yuxuan Zhu, Yike Liu, Ye Zhou, Xiaoyun Xing and Xiuya Wang

Finance Research Letters, 2025, vol. 75, issue C

Abstract: This paper investigates the correlation between climate risk, climate policy uncertainty, and carbon-intensive stock markets in China. Using daily closing prices for eight carbon-intensive stock sectors from January 3, 2017 to July 27, 2022, we construct a complex network based on Kendall rank correlations. Additionally, the minimum spanning tree is employed to elucidate the topological structure, thereby demonstrating the impact of climate risk and climate policy uncertainty on China’s carbon-intensive markets. The paper shows that the proposal of dual carbon targets has made China’s carbon-intensive stock markets more susceptible to shocks resulting from climate change.

Keywords: Climate policy uncertainty; Climate risk; Carbon-intensive stock market; Network analysis (search for similar items in EconPapers)
JEL-codes: C32 G14 G30 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325000820

DOI: 10.1016/j.frl.2025.106817

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