Green finance and the economic threats during COVID-19 pandemic

TERRA ECONOMICUS, , Vol. 19(no. 2),

Our paper aims at describing the links between green finance and sustainable development in the lightof the environmental threats and natural disasters represented by the recent coronavirus pandemiccaused by the COVID-19 virus. The recent situation heavily impacted on the financial and bankingsystem and transformed the way it has functioned before. Moreover, it demonstrated that the bankingsystem is more vulnerable than it should be. The banking sector has shown little capacity to absorbunexpected risks, owing to far-reaching international financial reforms. There are indications thatsome banks are on the verge of collapse, while some non-bank financial institutions and markets needimmediate support. A decade after the financial crisis, the world is still struggling with the problemsposed by the events of 2007–2009. Moreover, decisions taken during the crisis increased the risk thatpandemic financial stress would develop into a banking crisis over time. Our paper shows that nowthere is a need for the creation of healthy environment marked by the carbon-free and environmentallyfriendlyapproaches, and the green finance might help us to achieve that goal. Our results make it clearthat by promoting such instruments as green bonds, green loans and green mortgages stakeholders andpolicy-makers might help to create a more sustainable future for the people, their natural environment,and the economy as a whole.
Citation: Streimikiene, D., Kaftan, V. (2021). Green finance and the economic threats during COVID-19 pandemic. Terra Economicus 19(2): 105–113. DOI: 10.18522/2073-6606- 2021-19-2-105-113

Keywords: green finance; economic systems; sustainable development; institutional change; COVID-19; banking and finance

JEL codes: M31, O44, Q56, Q59

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606