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Rethinking Green Finance in Greenfield Investments: The Moderating Role of Institutional Qualities on Environmental Performance

In: The Handbook of Energy Policy

Author

Listed:
  • Rabindra Nepal

    (University of Wollongong)

  • Hammed Musibau

    (University of Tasmania)

  • Farhad Taghizadeh-Hesary

    (Tokai University
    Keio University)

  • Tina Prodromou

    (University of Wollongong)

  • Rohan Best

    (Macquarie University)

Abstract

The sole role of greenfield investment as a source for inducing greater environmental performance is debatable. This chapter investigates the linkages between greenfield investments, economic growth, and the role of institutional quality in environmental performance of all Asian countries between 2000 and 2018. The recently developed Environmental Performance Index (EPI) from Yale University has been adopted in this study as a proxy to measure environmental performance. Newly developed panel data methods based on the Dynamic Common Correlated Estimator (DCCE) that considers cross-sectional dependence across regions were used for the analysis. The study showed that the environmental performance in Asian countries improves when greenfield investments are made by strong institutions. The study also indicated that when good institutional factors are in place, good regulation can moderate the pollution haven hypothesis. Therefore, in the presence of supporting institutions, greenfield investments can be a worthwhile source of green finance. Also, there is evidence of support toward the Kuznets hypothesis given the positive and significant effect of economic growth on environmental performance in those countries.

Suggested Citation

  • Rabindra Nepal & Hammed Musibau & Farhad Taghizadeh-Hesary & Tina Prodromou & Rohan Best, 2023. "Rethinking Green Finance in Greenfield Investments: The Moderating Role of Institutional Qualities on Environmental Performance," Springer Books, in: Farhad Taghizadeh-Hesary & Dayong Zhang (ed.), The Handbook of Energy Policy, chapter 12, pages 347-377, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-6778-8_14
    DOI: 10.1007/978-981-19-6778-8_14
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    Cited by:

    1. Muntasir Murshed & Ilhan Ozturk & Avik Sinha & Mohammad Mahtab Alam, 2024. "Achieving environmental sustainability through renewable energy transition in the Next Eleven countries: the importance of establishing sound democratic governance," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-24, April.

    More about this item

    Keywords

    Environmental performance; Greenfield investments; Economic growth and institutions; Dynamic Common Correlated Model; JEL Classifications: F65; Q56; and O16;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • 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
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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