Assessing the impact of Russian–Ukrainian geopolitical risks on global green finance: a quantile dependency analysis

Faroque Ahmed (), Md. Monirul Islam and Shujaat Abbas
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Faroque Ahmed: Ural Federal University

Environmental Economics and Policy Studies, 2025, vol. 27, issue 4, No 5, 615-641

Abstract: Abstract In the pursuit of sustainable development, the presence of a robust financial sector plays a crucial role in the advancement of the green movement. However, the green bond market faces vulnerability due to the existence of geopolitical threats. This study employs empirical methods to investigate the quantile dependence of geopolitical risks originating from Russia and Ukraine on green finance. Specifically, the cross-quantilogram and partial cross-quantilogram approaches are utilized, analyzing daily data spanning from February 24, 2022, to May 26, 2023. The findings obtained from the cross-quantilogram approach reveal a pronounced negative quantile dependence between the geopolitical risks of both countries and green finance during bearish market conditions (q.10–q.40) in the short-term memory. Conversely, during the initial memory, a strong positive dependence is observed at the bullish (q.70–q.95) market conditions. However, no significant dependence is detected at either bearish or bullish market states concerning long-term memory. Interestingly, when employing the partial cross-quantilogram approach, a slightly negative association is observed at both bearish and bullish market conditions for long-term memory. These empirical findings provide valuable insights into the decision-making process for green investments, taking into account the dynamic nature of market conditions influenced by geopolitical risks stemming from the Russia–Ukraine conflict. Therefore, it is prudent for the governments to establish collaborations with private sectors and international agencies to fund green projects, thereby expediting green investment and mitigating geopolitical risks, with a focus on long-term investment, given the current absence of significant long-term detrimental effects of geopolitical risks on green bonds at the global level.

Keywords: Green finance; Green bonds; Geopolitical risks; Russian geopolitical turmoil; Ukrainian geopolitical events; Cross-quantilogram analysis (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10018-024-00395-3

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