Transformative Impacts of Green Finance on Co2 Emissions and Bank Stability

Abstract

Financial stability is paramount for economic growth, as most transactions in the real economy are made through the financial system. The true value of financial stability is best illustrated in its absence, in periods of financial instability. During these periods, banks are reluctant to finance profitable projects, asset prices deviate excessively from their intrinsic values, and payments may not arrive on time. Concerning the various empirical finding, the relationship between climate change and bank stability also needs to be considered with the implementation of green financing. Therefore, the purpose of this paper is to examine the mediating effect of green financing on the relationship between climate change and bank stability in ASEAN countries. This sample of this study consists of data from 10 countries in ASEAN country. The data analysis was conducted using data stretching from 2010 until 2019 and analysed based on Baron and Kenny's Step Approach. It is expected that the outcome of the study will prove the sustainability of the banking stability will continuously be stable with the injection role of green financing.