Work

Systemic Tail Dependence Between Biodiversity, Clean Energy, and Financial Transition Assets: A Partial Correlation-Based Network Approach

Year: 2025

Type: article

Abstract: This study investigates the systemic tail dependence among biodiversity, clean energy, and financial transition assets using a novel partial correlation-based network approach. Analyzing eleven indices from 2019 to 2025, we capture dynamic connectedness across normal and extreme market conditions. Empirical findings indicate that clean energy assets form a central hub of connectedness, while biodiversity-linked instruments increasingly influence systemic behavior under stress. Events such as the COVID-19 vaccine rollout, the Russia–Ukraine war, and El Niño intensify these dynamics. Compared to the traditional Generalized Forecast Error Variance Decomposition (GFEVD) framework, our approach better detects short-term shocks, offering actionable insights for climate-aware investment and risk management.

Source: Sustainability

DOI: 10.3390/su17146568

Authors: Nader Naifar, Mohammed Alhashim

Institutions: Imam Mohammad ibn Saud Islamic University, King Saud University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $2,896