Positive and negative shocks of financial markets on sustainable finance in europe: Evidence from vector auto regression and granger causality

Ali Raza and Faizah Alsulami

International Review of Economics & Finance, 2025, vol. 99, issue C

Abstract: This study analyzes the interdependencies between sustainable finance and various financial markets in Europe. The data has been sourced from the European financial markets covering the period from 2022 to 2024 b y using the Vector Auto-Regression (VAR) model. The study indicates that stocks, bonds, currencies and future markets and sustainable finance has positive shocks (P < 0.05), while exhibiting negative shocks of crypto and commodity markets and sustainable finance (p < 0.05). VAR Granger causality also supports these findings and shows a relationship among these variables. This study comprehending the findings that promote sustainability within the European financial system. It aims to guide policymakers, investors in society, and other market participants in enhancing the connection between sustainability and financial stability. This study provides systematic insights into the significance of sustainable finance and its relationship with various factors that constitute the overall market environment.

Keywords: Sustainable finance; Euro bonds; Euro stocks; Bitcoins; Gold; Oil; Future; Currency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025002059

DOI: 10.1016/j.iref.2025.104042

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