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Finance and decarbonisation: why equity markets do it better

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  • De Haas, Ralph
  • Popov, Alexander

Abstract

This article provides evidence that economies receiving more funding from stock markets than credit markets generate fewer carbon emissions. Increasing the equity financing share to one-half globally would reduce aggregate per capita emissions by about one-quarter of the Paris Agreement commitment. Our findings call for supporting equity-based initiatives rather than policies aimed at decarbonising the European economy through the banking sector. JEL Classification: G10, O4, Q5

Suggested Citation

  • De Haas, Ralph & Popov, Alexander, 2019. "Finance and decarbonisation: why equity markets do it better," Research Bulletin, European Central Bank, vol. 64.
    • Handle: RePEc:ecb:ecbrbu:2019:0064:
    Note: 861282
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    References listed on IDEAS

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    3. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    4. De Haas, Ralph & Popov, Alexander, 2019. "Finance and carbon emissions," Working Paper Series 2318, European Central Bank.
    5. Ralph De Haas & Alexander Popov, 2023. "Finance and Green Growth," The Economic Journal, Royal Economic Society, vol. 133(650), pages 637-668.
    6. Kim, Woojin & Weisbach, Michael S., 2008. "Motivations for public equity offers: An international perspective," Journal of Financial Economics, Elsevier, vol. 87(2), pages 281-307, February.
    7. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
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    Cited by:

    1. Justyna Zabawa & Cyprian Kozyra, 2020. "Eco-Banking in Relation to Financial Performance of the Sector—The Evidence from Poland," Sustainability, MDPI, vol. 12(6), pages 1-23, March.
    2. Dragan Ilić & Janick Christian Mollet, 2022. "Voluntary corporate climate initiatives and regulatory threat," International Economics and Economic Policy, Springer, vol. 19(1), pages 157-184, February.
    3. Jan Willem van den End & Guido Schotten & Sophie Steins Bisschop, 2021. "Financing the transition: seizing opportunities for a green recovery," Occasional Studies 1902, DNB.
    4. Eleonora Cavallaro & Ilaria Villani, 2023. "Financial asymmetries, risk sharing and growth in the EU," Working Papers 2023.12, International Network for Economic Research - INFER.

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    More about this item

    Keywords

    Climate change; financial markets;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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