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

Institutions

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
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Effect of green bond, credit default swap, and geopolitical risk on environmental degradation: Sectoral evidence from China

Mustafa Tevfik Kartal, Talat Ulussever, Galib Gafarli, Dilvin Taşkın
Social Sciences & Humanities Open
Sustainable Finance and Green Bonds
article

Effect of green bond, credit default swap, and geopolitical risk on environmental degradation: Sectoral evidence from China

Mustafa Tevfik Kartal, Talat Ulussever, Galib Gafarli, Dilvin Taşkın
article en

Abstract

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.

Social Sciences & Humanities OpenVol. 14
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)
Openalex Percentile: Top 6%
Sustainable Finance and Green Bonds
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.