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Do good intentions bring bad results? Climate finance and economic risks

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  • Zhao, Jinsong
  • Zhou, Boxu
  • Li, Xinrui

Abstract

Climate finance has emerged as an important solution for helping developing countries combat climate change. However, its potential adverse effects on the development of recipient countries remain unclear. This study analyzes multilateral climate finance flows from 2000 to 2018 to assess whether climate finance has an adverse impact on economic risks. The results indicate that climate finance significantly aggravates the economic risks, in which mitigation finance induces more economic risk than adaptation finance. The adverse effects are less notable in countries with higher political stability, indicating that stable political environment is essential in the use of climate finance.

Suggested Citation

  • Zhao, Jinsong & Zhou, Boxu & Li, Xinrui, 2022. "Do good intentions bring bad results? Climate finance and economic risks," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322002446
    DOI: 10.1016/j.frl.2022.103003
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    References listed on IDEAS

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    Cited by:

    1. Lv, Wendai & Li, Bin, 2023. "Climate policy uncertainty and stock market volatility: Evidence from different sectors," Finance Research Letters, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Climate change; Climate finance; Economic risk; Developing countries;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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