Institutional Settings and Financing Green Innovation

Neil M. Kellard; Alexandros Kontonikas; Michael J. Lamla; Stefano Maiani; Geoffrey Wood

doi:10.1016/j.intfin.2023.101853

Institutional Settings and Financing Green Innovation

Neil M. Kellard, Alexandros Kontonikas, Michael J. Lamla, Stefano Maiani, Geoffrey Wood

Research output: Contribution to journal › Article › peer-review

2 Citations (SciVal)

Abstract

The sheer scale of the current environmental challenge underscores the need for successful generation and application of environmentally sustainable innovations. At the same time, there has been growing interest in how national institutional contexts interact with the financial ecosystem, corporate governance, and firm behaviour. Bringing these topics together, we theoretically address and empirically evaluate the institutional and financial conditions under which green innovation and application occur. Using a novel sample of 53 countries over a twenty-one-year period, we show that green innovation is more likely to occur in Liberal Market Economies, a crucial feature of which is the heavier reliance by firms on markets to obtain their finance. However, we also show that this innovation is applied more frequently in economies with a higher degree of State coordination and where high short-term returns are less in demand. Given national institutional contexts are persistent, our results highlight that extensive regulatory intervention is likely required to develop green economies.

Original language	English
Article number	101853
Journal	Journal of International Financial Markets, Institutions and Money
Volume	89
Early online date	3 Oct 2023
DOIs	https://doi.org/10.1016/j.intfin.2023.101853
Publication status	Published - 31 Dec 2023

Bibliographical note

No funding acknowledged

Data Availability Statement

Data will be made available on request.

Funding

☆ We would like to thank Hui Li, for her insightful discussion of our paper, Hisham Farag, Sofia Johan, Douglas Cumming and Gregory Jackson for helpful suggestions and comments. Moreover, we express our gratitude to all the participants and organisers of the annual conference of the Sustainable Financial Innovation Centre (SFiC) on ‘Developments in Sustainable Finance and Responsible Investments’ held at Birmingham Business School (University of Birmingham) and of the ‘Greening the economy’ workshop held at the Freie Universität Berlin. Additionally, we wish to thank the editor, Jonathan A. Batten, and five anonymous reviewers for their valuable suggestions and feedback on earlier drafts of the paper.

Funders	Funder number
SFiC
Sustainable Financial Innovation Centre
University of Birmingham

Keywords

Corporate governance
Financial market depth
Green innovation
Liberal and Coordinated Markets
Varieties of capitalism

ASJC Scopus subject areas

Economics and Econometrics
Finance

Access to Document

10.1016/j.intfin.2023.101853Licence: CC BY-NC-ND

Cite this

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title = "Institutional Settings and Financing Green Innovation",

abstract = "The sheer scale of the current environmental challenge underscores the need for successful generation and application of environmentally sustainable innovations. At the same time, there has been growing interest in how national institutional contexts interact with the financial ecosystem, corporate governance, and firm behaviour. Bringing these topics together, we theoretically address and empirically evaluate the institutional and financial conditions under which green innovation and application occur. Using a novel sample of 53 countries over a twenty-one-year period, we show that green innovation is more likely to occur in Liberal Market Economies, a crucial feature of which is the heavier reliance by firms on markets to obtain their finance. However, we also show that this innovation is applied more frequently in economies with a higher degree of State coordination and where high short-term returns are less in demand. Given national institutional contexts are persistent, our results highlight that extensive regulatory intervention is likely required to develop green economies.",

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AU - Kontonikas, Alexandros

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AU - Wood, Geoffrey

N1 - No funding acknowledged

PY - 2023/12/31

Y1 - 2023/12/31

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Institutional Settings and Financing Green Innovation

Abstract

Bibliographical note

Data Availability Statement

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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Cite this