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An Introduction to Complex Networks in Climate Finance

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  • Alexander P. Kartun-Giles
  • Nadia Ameli

Abstract

In this perspective, we introduce recent research into the structure and function of complex investor networks supporting sustainability efforts. Using the case of solar, wind and hydro energy technologies, this perspective explores the complexity in low-carbon finance markets, defined as markets that direct capital flows towards low-carbon technologies, using network approaches to study their structure and dynamics. Investors are modeled as nodes which form a network or higher-order network connected by edges representing projects in which joint funding or security-related insurance was provided or other investment-related interaction occurred. We review the literature on investor networks generally, particularly in the case of complex networks, and address areas where these ideas were applied in this emerging field. The complex investor dynamics which emerge from the extant funding scenarios are not well understood. These dynamics have the potential to result in interesting non-linear behaviour, growth, and decline, which can be studied, explained and controlled using the tools of network science.

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  • Alexander P. Kartun-Giles & Nadia Ameli, 2023. "An Introduction to Complex Networks in Climate Finance," Papers 2309.15890, arXiv.org.
    • Handle: RePEc:arx:papers:2309.15890
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    References listed on IDEAS

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    1. R. Mantegna, 1999. "Hierarchical structure in financial markets," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 11(1), pages 193-197, September.
    2. Crane, Alan D. & Koch, Andrew & Michenaud, Sébastien, 2019. "Institutional investor cliques and governance," Journal of Financial Economics, Elsevier, vol. 133(1), pages 175-197.
    3. Florian Egli & Bjarne Steffen & Tobias S. Schmidt, 2018. "A dynamic analysis of financing conditions for renewable energy technologies," Nature Energy, Nature, vol. 3(12), pages 1084-1092, December.
    4. John Foster, 2005. "From simplistic to complex systems in economics," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(6), pages 873-892, November.
    5. Lindblom, Ted & Mavruk, Taylan & Sjögren, Stefan, 2018. "East or west, home is best: The birthplace bias of individual investors," Journal of Banking & Finance, Elsevier, vol. 92(C), pages 323-339.
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    Cited by:

    1. Lin Xiao & Arash Sioofy Khoojine, 2024. "Dynamic Anomaly Detection in the Chinese Energy Market During Financial Turbulence Using Ratio Mutual Information and Crude Oil Price Movements," Energies, MDPI, vol. 17(23), pages 1-22, November.

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