Abstract
This paper studies the effects of financial development, economic growth, and climate-related financial policies on carbon (CO 2 ) emissions for G20 countries. The focus is on policies implemented to different degrees by G20 countries to scale up green finance and address climate-related financial risks in 2000-2017 and represents this paper’s value-added. The empirical results obtained by relying on the panel quantile regression approach indicate that the impacts of the different explanatory variables on carbon emission are heterogeneous. Specifically, the effect of the stock of short-term financial policies on carbon emissions is negative, and its effect becomes smaller at higher quantiles. No significance is reported for the 10th quantile. The stock of long-term policies also show significant negative coefficients, but their impact is stronger for higher quantiles. Financial development contributes to improving environmental quality, and its impact is larger in higher emission countries. Energy consumption increases carbon emissions, with the strongest effects occurring at higher quantiles. Our results also support the validity of the EKC relationship and positive effects of GDP and population on high emissions levels. The study highlights that climate-related financial policies have a negative direct effect on CO 2 emissions but a positive indirect effect in some percentiles. This evidence can imply a worsening of environmental quality in high-emission countries when considering the stock of short-term policies and low-emission countries when analyzing the stock of long-term policies. The total effect appears nevertheless negative, which indicates that these policies may improve environmental quality overall in G20 countries.
Exploring the Effects of Climate-related Financial Policies on Carbon Emissions in G20 Countries: A Panel Quantile Regression Approach