Finance and Carbon Emissions
74 Pages Posted: 7 Oct 2019 Last revised: 2 Dec 2019
There are 2 versions of this paper
Date Written: September 2019
Abstract
We study the relation between financial structure and carbon emissions in a large panel of countries and industries. For given levels of
economic and financial development, emissions per capita are lower in economies that are relatively more equity-funded. Industry-level analysis reveals two channels. First, deeper stock markets reallocate investment towards cleaner industries and, second, they allow carbon-intensive industries to produce green patents and reduce their energy intensity. Only one-tenth of these industry-level reductions in domestic emissions is offset by increased carbon embedded in imports. A firm-level analysis of an exogenous shock to the cost of equity in Belgium confirms our findings.
Keywords: Carbon Emissions, Financial Development, Financial structure, Innovation
JEL Classification: G10, O4, Q5
Suggested Citation: Suggested Citation
Ralph De Haas (Contact Author)
European Bank for Reconstruction and Development ( email )
One Exchange Square
London, EC2A 2JN
United Kingdom
HOME PAGE: www.ebrd.com
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