Insurer green finance under regulatory cap-and-trade mechanism associated with green/polluting production during a war.

ABSTRACT: The cap-and-trade mechanism affects firms' production and operation decisions and carbon emissions, making them move towards environmental sustainability. This article develops a contingent claims model to examine the impact of the regulatory cap-and-trade mechanism on the green finance strategy of an insurer during a war. Participating in the cap-and-trade scheme of the insurer that funds the borrowing firms also implicitly affects firm production and carbon emissions. The results show that increasing the green loans decreases the interest margin of the insurer but helps policyholder protection. The insurer is reluctant to provide green loans for the green borrowing firm and thus retards sustainable development. A stringent regulatory cap of the cap-and-trade mechanism raises the insurer'

SUBMITTER: Huang FW 

PROVIDER: S-EPMC10019747 | biostudies-literature | 2023

REPOSITORIES: biostudies-literature