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Impact of the Green Financing Policy on the Stock Market - Short-Term Impact Analysis using the Green Sector as an Example

Author(s)

Qilin Chen

Affiliation(s)

Beijing University of Technology, Beijing, China

Abstract

The purpose of this study is to analyze the impact of green financing policies on the short-term stability of China's stock market, with a focus on the Green Sector. Using the "Guiding Opinions on Strengthening Financial Support for the Transformation of the Green Economy" issued by the State Administration of Financial Supervision and Administration on 31 July 2023 as the event to be studied, the event study methodology was used to calculate the abnormal rate of return (AR) and the cumulative abnormal rate of return (CAR) of A-share companies listed in the green sector under the SSE Index and the Shenwan Primary Industry Classification on a daily basis to measure the market's stability before and after the date of the event. By analyzing the green industry sector as a whole, this paper enhances the efficiency and representativeness of the study and provides a clear direction for subsequent analysis. The abnormal return (AR) and cumulative abnormal return (CAR) were calculated to measure the market reaction to the policy before and after the event date. The study found that after the enactment of the policy, the Greens sector did not experience the expected sustained significant abnormal gains. The study found that after the policy was enacted, the green sector did not experience the significant and sustained abnormal returns that had been expected, and the market's reaction was relatively stable, indicating that the policy's impact on market prices and volatility was relatively limited in the short term. This study provides empirical support for evaluating the market impact of the Green Finance Policy, and also serves as a reference for investors.

Keywords

Green Finance Policies; Event Study Methods; Abnormal Rates of Return; Green Industries; Stock Market Stability

References

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