Pub Date : 2025-01-10DOI: 10.1016/j.iref.2025.103860
Zhuangxiong Yu , Jiajia Cheng , Xunpeng Shi , Yang Yang
We investigate how the Rivalry Signal (RS) and Technology Spillover (TS) affect Corporate Environmental Performance (CEP) through Corporate Environmental Management (CEM). We identify Rival Signal and Technology Spillover from firms' information exchange with their rivals in export networks by product-level data of China based on product space theory. RS indicates intensified competition in a market, and TS indicates useful information in that market. We then explore the effects of RS and TS on CEP, and the empirical results show that RS and TS improve CEP simultaneously. These effects are more pronounced for firms with larger sizes, regions with more severe pollution and coastal areas. By employing mediating effect model, we find that the RS promotes firms' technological improvements and broadens the range of firms' imported intermediates, thereby enhancing CEP; the TS motivates firms to switch to the market's core product and brings about technological improvements, subsequently improving CEP.
{"title":"Rivalry signal transmission, technology spillover and corporate environmental performance","authors":"Zhuangxiong Yu , Jiajia Cheng , Xunpeng Shi , Yang Yang","doi":"10.1016/j.iref.2025.103860","DOIUrl":"10.1016/j.iref.2025.103860","url":null,"abstract":"<div><div>We investigate how the Rivalry Signal (RS) and Technology Spillover (TS) affect Corporate Environmental Performance (CEP) through Corporate Environmental Management (CEM). We identify Rival Signal and Technology Spillover from firms' information exchange with their rivals in export networks by product-level data of China based on product space theory. RS indicates intensified competition in a market, and TS indicates useful information in that market. We then explore the effects of RS and TS on CEP, and the empirical results show that RS and TS improve CEP simultaneously. These effects are more pronounced for firms with larger sizes, regions with more severe pollution and coastal areas. By employing mediating effect model, we find that the RS promotes firms' technological improvements and broadens the range of firms' imported intermediates, thereby enhancing CEP; the TS motivates firms to switch to the market's core product and brings about technological improvements, subsequently improving CEP.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103860"},"PeriodicalIF":4.8,"publicationDate":"2025-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151108","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-10DOI: 10.1016/j.iref.2025.103866
Shusheng Ding , Anqi Wang , Tianxiang Cui , Anna Min Du
The global community has witnessed a burgeoning anxiety for accommodating the current climate changes. This heightened awareness has evoked a resurgence in the formulation and implementation of climate policies. Political events like the U.S. presidential election, may yield substantial influence over the trajectory of future climate policy formulation. In this paper, we scrutinize the impact of climate policy uncertainty (CPU) on energy market volatility against the backdrop of the 2024 presidential election of the U.S. We provide evidence that the CPU has a strong effect on energy market volatilities in China, which is more pronounced during the U.S. presidential election episodes. Notably, our study uncovers a crucial effect of the CPU on energy market volatilities in China, which manifests in both short-term and long-term. The short-term impact tends to be insubstantial, while the long-term effect conveys its solid influence to energy markets, suggesting fruitful implications for energy market participants as well as climate policy makers.
{"title":"Renaissance of climate policy uncertainty: The effects of U.S. presidential election on energy markets volatility","authors":"Shusheng Ding , Anqi Wang , Tianxiang Cui , Anna Min Du","doi":"10.1016/j.iref.2025.103866","DOIUrl":"10.1016/j.iref.2025.103866","url":null,"abstract":"<div><div>The global community has witnessed a burgeoning anxiety for accommodating the current climate changes. This heightened awareness has evoked a resurgence in the formulation and implementation of climate policies. Political events like the U.S. presidential election, may yield substantial influence over the trajectory of future climate policy formulation. In this paper, we scrutinize the impact of climate policy uncertainty (CPU) on energy market volatility against the backdrop of the 2024 presidential election of the U.S. We provide evidence that the CPU has a strong effect on energy market volatilities in China, which is more pronounced during the U.S. presidential election episodes. Notably, our study uncovers a crucial effect of the CPU on energy market volatilities in China, which manifests in both short-term and long-term. The short-term impact tends to be insubstantial, while the long-term effect conveys its solid influence to energy markets, suggesting fruitful implications for energy market participants as well as climate policy makers.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103866"},"PeriodicalIF":4.8,"publicationDate":"2025-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151751","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-10DOI: 10.1016/j.iref.2025.103872
Buse Ustaoglu , Erkan Ustaoglu
The aim of the study is to examine the connectedness and portfolio implications between music tokens and music stocks. Spillovers between music tokens and music stocks differ across various circumstances. Under normal circumstances, there is a significant unconnected between music tokens and music stocks. In extreme declines and rises, the return interconnectedness between the assets increases dramatically. Additionally, return spillovers among assets fluctuate over time, influenced by extreme events such as the Russia-Ukraine war and the cryptocurrency market collapse. In the framework of portfolio applications, music tokens have been found to have hedging properties for music stocks. In particular, music tokens added to portfolios at optimal rates exhibit very high hedging properties for SiriusXM Radio (SIRI) and Tencent Music Entertainment Group (TME). The results are important for investors and portfolio managers.
{"title":"Music stocks and music tokens: Extreme connectedness and portfolio applications","authors":"Buse Ustaoglu , Erkan Ustaoglu","doi":"10.1016/j.iref.2025.103872","DOIUrl":"10.1016/j.iref.2025.103872","url":null,"abstract":"<div><div>The aim of the study is to examine the connectedness and portfolio implications between music tokens and music stocks. Spillovers between music tokens and music stocks differ across various circumstances. Under normal circumstances, there is a significant unconnected between music tokens and music stocks. In extreme declines and rises, the return interconnectedness between the assets increases dramatically. Additionally, return spillovers among assets fluctuate over time, influenced by extreme events such as the Russia-Ukraine war and the cryptocurrency market collapse. In the framework of portfolio applications, music tokens have been found to have hedging properties for music stocks. In particular, music tokens added to portfolios at optimal rates exhibit very high hedging properties for SiriusXM Radio (SIRI) and Tencent Music Entertainment Group (TME). The results are important for investors and portfolio managers.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103872"},"PeriodicalIF":4.8,"publicationDate":"2025-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151671","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-10DOI: 10.1016/j.iref.2025.103859
Juan Corbalán, Román Ferrer
This paper conducts a comparative analysis of the impact of actual share repurchases executed by U.S. and European banking firms between 2008 and 2020 on their subsequent operating performance, as measured by ROE and ROA. The empirical results indicate a significantly positive effect of share repurchases on the operating performance of both U.S. and European banks in the year following these transactions. This evidence is consistent with both the information signaling and free cash flow hypotheses, though it exhibits a slightly stronger inclination towards supporting the latter. This suggests that, in a mature industry like banking where organic growth opportunities are limited, stock repurchases serve as an effective strategy for returning excess cash to shareholders, not only enhancing shareholder value but also mitigating the risk of agency conflicts.
{"title":"The impact of share repurchases on bank operating performance after the global financial crisis: A comparison between the U.S. and Europe","authors":"Juan Corbalán, Román Ferrer","doi":"10.1016/j.iref.2025.103859","DOIUrl":"10.1016/j.iref.2025.103859","url":null,"abstract":"<div><div>This paper conducts a comparative analysis of the impact of actual share repurchases executed by U.S. and European banking firms between 2008 and 2020 on their subsequent operating performance, as measured by ROE and ROA. The empirical results indicate a significantly positive effect of share repurchases on the operating performance of both U.S. and European banks in the year following these transactions. This evidence is consistent with both the information signaling and free cash flow hypotheses, though it exhibits a slightly stronger inclination towards supporting the latter. This suggests that, in a mature industry like banking where organic growth opportunities are limited, stock repurchases serve as an effective strategy for returning excess cash to shareholders, not only enhancing shareholder value but also mitigating the risk of agency conflicts.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103859"},"PeriodicalIF":4.8,"publicationDate":"2025-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151758","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-10DOI: 10.1016/j.iref.2025.103873
Qi Wang , Ming Liu , Kai Xie
This paper investigates the effect of mobile payments on household access to financial services from traditional commercial banks. Utilizing the nationally representative data from the 2019 China Household Finance Survey, we employ the People's Bank of China's 2010 issuance of the Administrative Measures on Non-financial Institution Payment Services as an instrumental variable to analyze Alipay adoption. Our findings indicate that Alipay significantly diminishes Chinese households' reliance on bank branches for financial services. The analysis reveals two main effects: firstly, Alipay reduces households' cash holdings and demand deposits; secondly, it shifts financial management activities from bank branches to online platforms. Additionally, our heterogeneity analysis shows that the shift from bank branches to Alipay is more pronounced among individuals with higher educational levels and those in urban areas. These insights contribute new micro-level evidence to the understanding of FinTech's impact on commercial banks.
{"title":"Disappearing bank Branches: Evidence from China household finance survey","authors":"Qi Wang , Ming Liu , Kai Xie","doi":"10.1016/j.iref.2025.103873","DOIUrl":"10.1016/j.iref.2025.103873","url":null,"abstract":"<div><div>This paper investigates the effect of mobile payments on household access to financial services from traditional commercial banks. Utilizing the nationally representative data from the 2019 China Household Finance Survey, we employ the People's Bank of China's 2010 issuance of the Administrative Measures on Non-financial Institution Payment Services as an instrumental variable to analyze Alipay adoption. Our findings indicate that Alipay significantly diminishes Chinese households' reliance on bank branches for financial services. The analysis reveals two main effects: firstly, Alipay reduces households' cash holdings and demand deposits; secondly, it shifts financial management activities from bank branches to online platforms. Additionally, our heterogeneity analysis shows that the shift from bank branches to Alipay is more pronounced among individuals with higher educational levels and those in urban areas. These insights contribute new micro-level evidence to the understanding of FinTech's impact on commercial banks.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103873"},"PeriodicalIF":4.8,"publicationDate":"2025-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103853
Nian Wang , Yue Huang , Ruiwen Liao
Fully releasing the growth-inducing effect of digital new infrastructure (DNI) on urban green innovation (UGI) not only facilitates the distribution of DNI but also enhances UGI, thereby achieving the effect of "killing two birds with one stone". However, this issue has received limited discussion. Given this, this study examines the impact of DNI on UGI, and explores how to strengthen DNI's impacts on UGI through the channel of factor allocation based on the panel data from 274 Chinese cities from 2008 to 2021. The results show that DNI significantly boosts the improvement of UGI. For every 1% increase in DNI, the level of UGI increases by 0.09%. Moreover, this effect is more pronounced in western cities, monocentric urban agglomerations, and the “from 1 to 100” application scenario stage. Factor allocation, consisting of capital factor allocation and labor factor allocation, is an important channel between DNI and UGI. Overall, DNI promotes UGI by mitigating capital and labor factor distortion. However, this effect varies across heterogeneous scenarios. The capital factor allocation channel demonstrates more significant mediating effects under the “from 1 to 100” application scenario stage, eastern cities and polycentric urban agglomerations, respectively; while the mediating effects of labor factor allocation channel are more significant under the “from 0 to 1” technological research stage, western cities and monocentric urban agglomerations, respectively. Our findings enrich the empirical evidence of the impact of DNI and provide new insights for promoting UGI.
{"title":"Kill two birds with one stone: How to strengthen digital new infrastructure's impacts on urban green innovation – The channel of factor allocation","authors":"Nian Wang , Yue Huang , Ruiwen Liao","doi":"10.1016/j.iref.2025.103853","DOIUrl":"10.1016/j.iref.2025.103853","url":null,"abstract":"<div><div>Fully releasing the growth-inducing effect of digital new infrastructure (DNI) on urban green innovation (UGI) not only facilitates the distribution of DNI but also enhances UGI, thereby achieving the effect of \"killing two birds with one stone\". However, this issue has received limited discussion. Given this, this study examines the impact of DNI on UGI, and explores how to strengthen DNI's impacts on UGI through the channel of factor allocation based on the panel data from 274 Chinese cities from 2008 to 2021. The results show that DNI significantly boosts the improvement of UGI. For every 1% increase in DNI, the level of UGI increases by 0.09%. Moreover, this effect is more pronounced in western cities, monocentric urban agglomerations, and the “from 1 to 100” application scenario stage. Factor allocation, consisting of capital factor allocation and labor factor allocation, is an important channel between DNI and UGI. Overall, DNI promotes UGI by mitigating capital and labor factor distortion. However, this effect varies across heterogeneous scenarios. The capital factor allocation channel demonstrates more significant mediating effects under the “from 1 to 100” application scenario stage, eastern cities and polycentric urban agglomerations, respectively; while the mediating effects of labor factor allocation channel are more significant under the “from 0 to 1” technological research stage, western cities and monocentric urban agglomerations, respectively. Our findings enrich the empirical evidence of the impact of DNI and provide new insights for promoting UGI.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103853"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151666","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103863
Mengzhe Xue , Mengyuan Lu , Anna Min Du , Bowen Zheng
Climate change has become an unavoidable external force influencing firms' operations by reshaping policy environments and raising societal expectations. As a result, firms are compelled to adopt measures to address these challenges. This study examines the causal relationship between climate change and firms' ESG (Environmental, Social, and Governance) performance using data from Chinese manufacturing firms listed between 2009 and 2021, while controlling for firm-specific and climate-related factors. The findings reveal that temperature deviation (TD) significantly improves firms’ ESG performance, a result that remains robust across various tests. Moreover, TD enhances ESG performance primarily through reputation and costs channels, with stronger effects observed in firms with low reputations compared to high-reputation firms, and in high energy-consuming firms compared to those with low energy consumption. This study offers a novel perspective on how climate change impacts firms at the operational level and provides actionable recommendations for governments to support and promote improved ESG performance.
{"title":"How do firms respond to climate change? Evidence based on ESG performance","authors":"Mengzhe Xue , Mengyuan Lu , Anna Min Du , Bowen Zheng","doi":"10.1016/j.iref.2025.103863","DOIUrl":"10.1016/j.iref.2025.103863","url":null,"abstract":"<div><div>Climate change has become an unavoidable external force influencing firms' operations by reshaping policy environments and raising societal expectations. As a result, firms are compelled to adopt measures to address these challenges. This study examines the causal relationship between climate change and firms' ESG (Environmental, Social, and Governance) performance using data from Chinese manufacturing firms listed between 2009 and 2021, while controlling for firm-specific and climate-related factors. The findings reveal that temperature deviation (TD) significantly improves firms’ ESG performance, a result that remains robust across various tests. Moreover, TD enhances ESG performance primarily through reputation and costs channels, with stronger effects observed in firms with low reputations compared to high-reputation firms, and in high energy-consuming firms compared to those with low energy consumption. This study offers a novel perspective on how climate change impacts firms at the operational level and provides actionable recommendations for governments to support and promote improved ESG performance.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103863"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151670","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103867
Yuanyuan Liu , Qianqian Liu
This paper utilizes sample data from publicly listed companies between 2007 and 2023 to conduct an in-depth analysis of how board governance and information disclosure affect stock price stability. The study finds a significant positive correlation between board governance and stock price stability. Furthermore, dividend policy plays a partial mediating role in the effect of board governance on stock price stability. Heterogeneity analysis shows that the positive influence of board governance on stock prices is more pronounced in companies with a higher proportion of institutional ownership and in high-tech firms. Regarding information disclosure, the study confirms its positive contribution to stock price stability, with financing constraints serving as a partial mediator. The research further reveals significant differences in how information disclosure influences stock price stability across companies with different ownership structures and financial conditions, with the effect being particularly pronounced in non-state-owned and high-leverage firms.
{"title":"Exploring the effects of board governance and information disclosure on stock price stability","authors":"Yuanyuan Liu , Qianqian Liu","doi":"10.1016/j.iref.2025.103867","DOIUrl":"10.1016/j.iref.2025.103867","url":null,"abstract":"<div><div>This paper utilizes sample data from publicly listed companies between 2007 and 2023 to conduct an in-depth analysis of how board governance and information disclosure affect stock price stability. The study finds a significant positive correlation between board governance and stock price stability. Furthermore, dividend policy plays a partial mediating role in the effect of board governance on stock price stability. Heterogeneity analysis shows that the positive influence of board governance on stock prices is more pronounced in companies with a higher proportion of institutional ownership and in high-tech firms. Regarding information disclosure, the study confirms its positive contribution to stock price stability, with financing constraints serving as a partial mediator. The research further reveals significant differences in how information disclosure influences stock price stability across companies with different ownership structures and financial conditions, with the effect being particularly pronounced in non-state-owned and high-leverage firms.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103867"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103856
Anthanasius Fomum Tita , Joseph J. French , Constantin Gurdgiev , Adefemi Obalade
We investigate the transmission of shocks between the stock market, its sub-indices and business sentiment in a major emerging economy. Based on data for 2003–2023, using dynamic connectedness and VAR models, we show that the Johannesburg Stock Exchange All Share index (ASI), mid-cap, and resources sub-indices are major net transmitters of volatility. The business confidence, small-cap, and SAMSCI indices are net receivers. We find a unidirectional causality from the ASI to business confidence: the stock market movements predict changes in confidence but not vice versa. The tail of the market is, indeed, wagging the dog of the real economy. The vulnerability of business confidence to external shocks that impacts equity returns are important for policy makers to note and take action to mitigate.
{"title":"Does the tail of finance wag the dog of the real economy? Dynamic connectedness of the stock market and business confidence","authors":"Anthanasius Fomum Tita , Joseph J. French , Constantin Gurdgiev , Adefemi Obalade","doi":"10.1016/j.iref.2025.103856","DOIUrl":"10.1016/j.iref.2025.103856","url":null,"abstract":"<div><div>We investigate the transmission of shocks between the stock market, its sub-indices and business sentiment in a major emerging economy. Based on data for 2003–2023, using dynamic connectedness and VAR models, we show that the Johannesburg Stock Exchange All Share index (ASI), mid-cap, and resources sub-indices are major net transmitters of volatility. The business confidence, small-cap, and SAMSCI indices are net receivers. We find a unidirectional causality from the ASI to business confidence: the stock market movements predict changes in confidence but not vice versa. The tail of the market is, indeed, wagging the dog of the real economy. The vulnerability of business confidence to external shocks that impacts equity returns are important for policy makers to note and take action to mitigate.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103856"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151667","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103857
Yingying Xu , Donald Lien
Reconciling economic development and emission reductions of polluting gases requires balancing long-term and short-term targets across various markets. As a new production cost, carbon price is expected to affect the supply and demand of energy-intensive sectors. Therefore, within a unified time-frequency framework, this study examines the dynamic connectedness between the largest carbon emission market (i.e., China) and energy-intensive sectors. Based on the daily trading price and trading volume of the national carbon market and eight carbon pilots, this study constructs a monthly China Carbon Market Price Indicator, and then measures the dynamic short- and long-term total and directional connectedness between the carbon market and six energy-intensive sectors. The empirical results show that the total connectedness is strong, particularly in the long-term. Nevertheless, the carbon market does not play an important role in the system, reflecting that China's carbon market is not mature, and the connection with other markets is relatively weak. Generally, the carbon market mainly receives information shocks from energy-intensive sectors rather than transmitting information to them. The carbon market does produce significant impacts on the construction and petroleum industries, particularly since 2021. Policy changes and major events drive changes in the connectedness between carbon markets and energy-intensive sectors. Therefore, balancing industrial developments and stable carbon prices requires refined policy designs accounting for diversified impacts of carbon markets on different sectors.
{"title":"How do carbon markets interact with energy-intensive sectors? Evidence from price connectedness","authors":"Yingying Xu , Donald Lien","doi":"10.1016/j.iref.2025.103857","DOIUrl":"10.1016/j.iref.2025.103857","url":null,"abstract":"<div><div>Reconciling economic development and emission reductions of polluting gases requires balancing long-term and short-term targets across various markets. As a new production cost, carbon price is expected to affect the supply and demand of energy-intensive sectors. Therefore, within a unified time-frequency framework, this study examines the dynamic connectedness between the largest carbon emission market (i.e., China) and energy-intensive sectors. Based on the daily trading price and trading volume of the national carbon market and eight carbon pilots, this study constructs a monthly China Carbon Market Price Indicator, and then measures the dynamic short- and long-term total and directional connectedness between the carbon market and six energy-intensive sectors. The empirical results show that the total connectedness is strong, particularly in the long-term. Nevertheless, the carbon market does not play an important role in the system, reflecting that China's carbon market is not mature, and the connection with other markets is relatively weak. Generally, the carbon market mainly receives information shocks from energy-intensive sectors rather than transmitting information to them. The carbon market does produce significant impacts on the construction and petroleum industries, particularly since 2021. Policy changes and major events drive changes in the connectedness between carbon markets and energy-intensive sectors. Therefore, balancing industrial developments and stable carbon prices requires refined policy designs accounting for diversified impacts of carbon markets on different sectors.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103857"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151089","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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