Blockchain and Climate Finance

Abstract

This chapter investigates the nexus between blockchain and green markets by employing the wavelet coherency time-frequency analysis from July 14, 2021, to March 20, 2024. The study employs an index- based approach to represent the blockchain market and focuses on four green financial Assets: green bonds, clean energy, clean cryptocurrency and sustainable equities. Findings entail a weak to absent long run co-movement. The mid-run result shows a moderately positive co-movement, which suggests that these markets tend to move in the same direction, with the blockchain index showing the leading role in most cases. These results have significant implications for market participants and policy makers. In fact, investors can use these findings to diversify their portfolios by incorporating blockchain and green financial instruments and, therefore, mitigate portfolio risk. Policymakers could also take advantage of these findings by promoting sustainable economic policies which capitalize on the stabilizing effects that blockchain technology has.