Essays on Green Finance and Climate Change Mitigation Policies in Sub-Saharan Africa

Abstract

The stakes and issues related to access to green finance are central to the fight against climate change. The objectives of our research were to analyse the factors explaining the allocation and adoption of green finance practices, as well as the effectiveness of environmental-related taxes on greenhouse gas emissions reduction. Using an estimation technique based on Bayesian Model Averaging and secondary data, our results reveal that countries with good governance, high levels of social readiness, high gross domestic product per capita and population and low carbon dioxide emissions per capita tend to attract more climate finance from international public sources. In addition, we used primary data and a logistic model approach to analyse the factors motivating commercial banks to adopt green finance practices. Our results reveal that commercial banks are governed by a top-down approach, and decisions to adopt green finance practices come from decision-makers rather than any other factors (such as competitors' pressure or community pressure). Finally, we investigated the impact of environment-related taxes on greenhouse gas emissions using an approach based on Two-Stage Least Squares and Prais-Winsten regression techniques. Our results show that environment-related taxes in their current form do not have a statistically significant impact on reducing greenhouse gas emissions. In light of these results, we have formulated recommendations that could shape green finance policies. The study recommends that recipient countries strengthen their Monitoring, Reporting and Verification systems, which may enhance trust between actors and create an enabling framework conducive to the development of bankable, high-impact projects. International fund providers must allocate climate finance according to the needs of beneficiaries, especially those highly vulnerable to the effects of climate change. The study also recommends that financial sector regulators take measures to promote the development of green finance.