Do green finance and green innovation affect corporate credit rating performance? Evidence from machine learning approach.

This study investigates the impact of green finance (GF) and green innovation (GI) on corporate credit rating (CR) performance in Chinese A-share listed firms from 2018 to 2021. The least absolute shrinkage and selection operators (LASSOs) machine learning algorithms are first used to select the critical drivers of corporate credit performance. Then, we applied partialing-out LASSO linear regression (POLR) and double selection LASSO linear regression (DSLR) machine learning techniques to check the impact of GF and GI on CR. The main results reveal that a 1% increase in GF diminishes CR by 0.26%, whereas GI promotes CR performance by 0.15%. Moreover, the heterogeneity analysis reveals a more significant negative effect of GF on the CR performance of heavily polluting firms, non-state-owned enterprises, and firms in the Western region. The findings raise policies for managing green finance and encouraging green innovation formation, as well as addressing company heterogeneity to support sustainability.

Does Chinese foreign direct investment harm CO2 emissions in the Belt and Road Economies.

China's Going Global Strategy and Belt and Road Initiative gained great attention among scholars. Moreover, it is believed that Chinese investments abroad cause serious social and environmental externalities. Hence, in this paper, we examine how China's foreign direct investments influence the carbon emissions of 35 Belt and Road Initiative countries from 2000 to 2019. To do so, we use a panel model that accounts for heterogeneity and country cross-section dependence. Our results show that while other countries' foreign direct investments have contributed to the deterioration of the environment in these countries, Chinese investments have not. This substantiates the hypothesis of the halo effect influence of China's foreign investments as opposed to other countries' investments which may seek a haven for its carbon emissions. These results highlight the importance of source and destination regulations of foreign direct investments in terms of their environmental impact and carbon emissions in the Belt and Road Initiative countries. It also provides a fresh finding on the efficacy of China's foreign investment management policies and regulations in producing the desired environmental outcome in hosting countries.

Does renewable energy electricity and economic complexity index help to achieve carbon neutrality target of top exporting countries?

Despite extensive studies into international trade and CO2 pollution, a panel of only top exporting economies was not considered. As the current research is an endeavor to address the gap by exploring the impact of economic complexity index (ECI) and renewable energy electricity (RELC) on consumption-based carbon emissions (CCO2) in the presences of exports, imports, and gross domestic product (GDP) in the top exporting countries from 1990 to 2019. The results confirm a relationship between consumption-based carbon emissions, economic complexity index, renewable energy electricity, exports, imports, and economic growth in both the short-run and long run. Empirical evidence for cross-sectional auto-regressive distributed lags (CS-ARDL) estimates, confirms that economic complexity index imports and GDP are positively associated and have significant adverse short-run and long-run impacts on consumption-based carbon emission. Whereas, export and renewable energy electricity significantly reduce carbon emissions. To achieve carbon neutrality target, policymakers should make economic complexity reforms, import green products, and promote investments in sustainable sources.

Does exports diversification and environmental innovation achieve carbon neutrality target of OECD economies?

Achieving carbon neutrality is of great importance to many developed and developing countries around the globe. Global warming is one of the leading issues caused by human activities. To cope with environmental challenges, and to achieve carbon neutrality, fiscal decentralization and eco-innovation are promising strategies that can also enable countries and local governments to pursue visible economic growth. This study investigates the role of export diversification, environment-related technological innovation, and fiscal decentralization in effectively achieving carbon neutrality target for 37 OECD (Organization for Economic Cooperation and Development) economies from 1970 to 2019. For empirical analysis, it uses second-generation tests that deal with heterogeneity and cross-sectional dependence issues. To this end, this study employs updated cointegration techniques. The augmented mean group (AMG) approach is used to examine the long-run dynamic equilibrium among the variables of interest. The findings indicate that export diversification and fiscal decentralization followed by GDP growth affect carbon dioxide emission positively. While renewable energy consumption and environment-related technological innovation assure environmental improvement. Additionally, short-run causal and unidirectional links are found running from fiscal decentralization, export diversification, and environment-related technological innovation to carbon emissions. Our findings suggest that OECD partner countries need to be careful while devising fiscal decentralization and export diversification policies. They should increase the share of renewable energy, and expand environment-related technological innovation. Such strategic efforts would direct the OECD countries to meet the climate change mitigation agenda of sustainable development goals.