Finance and carbon emissions
Ralph De Haas () and
Alexander Popov ()
No 2318, Working Paper Series from European Central Bank
We study the relation between the structure of financial systems and carbon emissions in a large panel of countries and industries over the period 1990-2013. We find that for given levels of economic and financial development and environmental regulation, CO2 emissions per capita are lower in economies that are relatively more equity-funded. Industry-level analysis reveals two distinct channels. First, stock markets reallocate investment towards less polluting sectors. Second, they also push carbon-intensive sectors to develop and implement greener technologies. In line with this second effect, we show that carbon-intensive sectors produce more green patents as stock markets deepen. We also document an increase in carbon emissions associated with the production of imported goods equal to around one-tenth of the reduction in domestic carbon emissions. JEL Classification: G10, O4, Q5
Keywords: carbon emissions; financial development; financial structure; innovation (search for similar items in EconPapers)
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Working Paper: Finance and Carbon Emissions (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20192318
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