Toward a Low-carbon Economy: Exploring the Asymmetric Linkages Between Green Bonds and Non-renewable Energy Resources

Growing concerns over economic distress and ecological degradation have demanded framing those policies that will accelerate economic growth by least hurting the environment. The 2030 agenda of sustainable development has made the world more alert to the actions that mitigate negative impacts on the environment. Green finance has become an essential instrument for tackling the twin demands of economic expansion and environmental preservation. Green bonds (GB) are one of the most prevalent ways to fund green projects and eventually build a low-carbon economy. However, the impacts of growing investment in GB on non-renewable energy (NRE) resources were not examined well. This study examines the asymmetric linkages between GB, crude oil (CO), natural gas (NG), and heating oil (HO) using global data spanning over a decade from 2013 to 2023. The long- and short-term asymmetric connectedness between the variables is examined using a Non-linear Auto Regressive Distributed Lag (NARDL) model. The study reveals an asymmetric linkage between the variables. The results have implications for investors, especially those who wish to create portfolios using GB and other NRE resources. The study becomes novel in terms of the methodology and data. The study has insinuations on government and policymakers. Furthermore, the study alerts the portfolio investors about the asymmetric association between GB and other NRE resources.