Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302560.2 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 20/2024
Version Description: 
This Version: March 10, 2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
This study employs bilateral data on external assets to examine the impact of climate policies on the reallocation of international capital. We find that the stringency of climate policy in the destination country is significantly and positively associated with an increase in the allocation of portfolio equity and banking investment to that country. However, it does not show significant effects on the allocation of foreign direct investment and portfolio debt. Our findings are not driven by valuation effects, and we present evidence that suggests diversification, suasion, and uncertainty mitigation as possible underlying mechanisms.
Subjects: 
capital flows
climate change policy
green investment
international asset allocation
JEL: 
F21
F36
F64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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2 10419/302560.2 This Version: March 10, 2025
1 10419/302560 This Version: August 22, 2024

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