Effect of green bond, credit default swap, and geopolitical risk on environmental degradation: Sectoral evidence from China
Countries have been dealing with environmental issues and searching for solutions. By considering China's leading position among the highest carbon dioxide (CO 2 )-emitting countries, as well as the lack of sectoral examination, this study uncovers the interrelationships among green bonds (GBs), credit default swap (CDS) spreads, geopolitical risk (GPR), and CO 2 emissions in China. In doing this, the study considers main sectors (i.e., transport, industry, and power) and total CO 2 emissions to consider sectoral heterogeneity, uses monthly data from 2019/1 to 2026/2, and applies the Wavelet Local Multiple Correlation (WLMC) method. The study empirically reveals that (i) in bi-variate analysis, GB, CDS, and GPR have mixed association with sectoral CO 2 emissions across terms; (ii) in multivariate analysis, GB, CDS, and GPR have a positive association with sectoral and total CO 2 emissions; (iii) at the sectoral level, GPR and CDS have a negative association with power sector and total CO 2 emissions across short-term and medium-term. Also, GB has a mixed association with sectoral and total CO 2 emissions across the medium-term; (iv) the dominant variable varies across sectors and terms, where CDS and GB are leading at short-term and long-term, while CDS and GPR are pioneering in medium-term; (v) the outcomes, where dominance of effective factors is searched, do not differ across aggregated and disaggregated level CO 2 emissions. Thus, empirical outcomes highlight the differentiating association of the factors with sectoral and total CO 2 emissions, whereas the dominance of the factors is stable across sectoral and total CO 2 emissions. Accordingly, relying on the empirical findings, the study discusses various policy options for Chinese policymakers in decarbonizing economic sectors.
Authors
- Mustafa Tevfik Kartal (ORCID: https://orcid.org/0000-0001-8038-8241)
- Talat Ulussever (ORCID: https://orcid.org/0000-0002-5673-1238)
- Galib Gafarli (ORCID: https://orcid.org/0000-0002-2292-2896)
- Dilvin Taşkın
Institutions
- Khazar University (AZ)
- European University of Lefke (TR)
- Baku State University (AZ)
- Azerbaijan State University of Economics (AZ)
- Korea University of International Studies (KR)
- Baku Engineering University (AZ)
- Boğaziçi University (TR)
- Yaşar University (TR)
Publication Details
- Journal
- Social Sciences & Humanities Open
- Published
- 2026-07-17
- DOI
- https://doi.org/10.1016/j.ssaho.2026.103230
- Primary Topic
- Sustainable Finance and Green Bonds
- Type
- article
- Field-Weighted Citation Impact
- 0.00