CLIMATE FINANCE IN THE WAKE OF COVID-19: CONNECTEDNESS OF CLEAN ENERGY WITH CONVENTIONAL ENERGY AND REGIONAL STOCK MARKETS

Sitara Karim (), Shabeer Khan, Nawazish Mirza, Suha M. Alawi () and Farhad Taghizadeh-Hesary ()
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Sitara Karim: Department of Business Administration, Faculty of Management Sciences, ILMA University, Karachi, Pakistan
Shabeer Khan: ��Department of Islamic Economics and Finance, Sakarya University, Serdivan, Turkey‡Department of Business Administration, Sukkur IBA University, Sukkur, Pakistan
Suha M. Alawi: �Department of Finance, King Abdulaziz University, Saudi Arabia
Farhad Taghizadeh-Hesary: ��Tokai University, Hiratsuka-shi 259-1292, Kanagawa-ken, Japan

Climate Change Economics (CCE), 2022, vol. 13, issue 03, 1-25

Abstract: Focusing on raising climate concerns and sustaining a clean ecosystem, the current study strives to examine the connectedness of clean energy markets with conventional energy markets and four regional stock markets of Asia, Pacific, Europe, and America for the period spanning January 1, 2004 to August 31, 2021. We employed the volatility connectedness methodology using dynamic conditional correlation (DCC-GARCH) estimates for analysis purposes. There is pronounced within class connectedness of all markets except conventional energy markets, which showed strong disconnection from the network. However, strong inter-class spillovers are reported between clean energy and regional stock markets. Time-varying analysis revealed that intense spillovers are shaped during the Global Financial Crisis, Shale Oil Crisis, and COVID-19 pandemic. Meanwhile, time-varying net connectedness estimates illuminate that world renewable energy and American stock markets are net transmitters, whereas leftover markets are net recipients of spillovers. Further analysis of sub-sample periods during GFC, SOR, and COVID-19 validate that intense spillovers are formed when markets experience unexpected financial, economic, and global health turmoil. We proposed significant implications for regional stock markets of Asia, Pacific, Europe and America to concentrate on the climate-friendly energy markets than conventional energy markets as they service the clean ecosystem motives more specifically.

Keywords: Clean energy markets; conventional energy markets; DCC-GARCH; regional markets; volatility analysis (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S2010007822400085

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