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Investing in Emerging Markets: Environmental Performance and its Effect on Risk Profile

Jaarnek, Felicity LU (2023) EOSK12 20231
Department of Economic History
Abstract
Debt has gained paramount importance for policy makers, stakeholders, and investors due to its far-reaching implications on economic stability, growth prospects, and financial resilience. Meanwhile, environmental conditions are increasing in importance when assessing credit risk. This study examines the relationship between environmental risk, environmental progress, and credit default swap (CDS) spreads in emerging economies. The findings reveal a significant positive impact of environmental risk on CDS spreads. However, there is no sufficient evidence for the effect of environmental progress on CDS spreads. The results have implications for sovereign debt investment, risk assessment, and sustainable policies. The results also highlight... (More)
Debt has gained paramount importance for policy makers, stakeholders, and investors due to its far-reaching implications on economic stability, growth prospects, and financial resilience. Meanwhile, environmental conditions are increasing in importance when assessing credit risk. This study examines the relationship between environmental risk, environmental progress, and credit default swap (CDS) spreads in emerging economies. The findings reveal a significant positive impact of environmental risk on CDS spreads. However, there is no sufficient evidence for the effect of environmental progress on CDS spreads. The results have implications for sovereign debt investment, risk assessment, and sustainable policies. The results also highlight the amplified influence of environmental factors during economic downturns and the complex dynamics within emerging economies. While acknowledging limitations, we suggest future research explore broader implications, economic conditions, and standardized frameworks for incorporating environmental considerations in risk assessment. (Less)
Please use this url to cite or link to this publication:
author
Jaarnek, Felicity LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
CDS spread, sovereign debt, ESG, environment, emerging economies
language
English
id
9140336
date added to LUP
2023-11-09 08:44:00
date last changed
2023-11-09 08:44:00
@misc{9140336,
  abstract     = {{Debt has gained paramount importance for policy makers, stakeholders, and investors due to its far-reaching implications on economic stability, growth prospects, and financial resilience. Meanwhile, environmental conditions are increasing in importance when assessing credit risk. This study examines the relationship between environmental risk, environmental progress, and credit default swap (CDS) spreads in emerging economies. The findings reveal a significant positive impact of environmental risk on CDS spreads. However, there is no sufficient evidence for the effect of environmental progress on CDS spreads. The results have implications for sovereign debt investment, risk assessment, and sustainable policies. The results also highlight the amplified influence of environmental factors during economic downturns and the complex dynamics within emerging economies. While acknowledging limitations, we suggest future research explore broader implications, economic conditions, and standardized frameworks for incorporating environmental considerations in risk assessment.}},
  author       = {{Jaarnek, Felicity}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Investing in Emerging Markets: Environmental Performance and its Effect on Risk Profile}},
  year         = {{2023}},
}