Role of green finance, volatility and risk in promoting the investments in Renewable Energy Resources in the post-covid-19

Abstract

Among the climate change policies, improving energy efficiency and investment in renewable sources are considered key driving forces that may lead to sustainable outcomes over a longer period. This study aims to provide new insight into the role of green financing, volatility, and geopolitical risk in dealing with the investment in renewable energy sources through micro and macro-level data during 2015–2020 in China. Several benchmarks and other regression estimation approaches were applied to address the study title while considering both direct and indirect association between the variables of interest. The study findings have shown that green financing (in the form of green bonds) and green regulations like environmental taxes play a significant and positive role in promoting investment in renewable energy sources. However, oil price volatility and geopolitical risk adversely impact the investment pattern for the clean energy sources in China when controlling the firm size and corporate governance practices. The study also justifies the moderating role of green regulations while strengthening the relationship between green financing and investment in renewable energy. Based on the study findings, it is recommended that green firms in China should be promoted so that investment in renewable energy sources would be considered as a long-term strategy. Comprehending both theoretical and empirical findings, the study has provided meaningful insights for policymakers and environmentalists to design and implement environmental practices that have sustainable returns.