Countering geopolitical risk: The synergy of climate finance and financial access for entrepreneurship

• Geopolitical risk deters entrepreneurial activities in LMICs. • Climate finance boosts entrepreneurship but cannot offset geopolitical risk alone. • Financial access amplifies climate finance’s role in mitigating geopolitical risk. • Policies must pair climate finance with deeper financial access. This study examines whether geopolitical risk (GPR) influences entrepreneurship in low- and middle-income countries (LMIC) and whether climate finance and financial access can mitigate its adverse effects. Using panel data from 14 LMICs (2007–2022) and employing dynamic GMM estimations, results show that GPR significantly reduces entrepreneurship, while climate finance positively influences it but does not independently offset GPR's impact. However, climate finance in the presence of financial access effectively buffers against geopolitical shocks. The results highlight the need for integrated policies that combine political stability, targeted climate finance, and strengthened financial systems.