Measurement of carbon finance level and exploration of its influencing factors

TL;DR

This study constructs a comprehensive carbon finance index for Chinese cities using MCDA and Shannon-Spearman measures, identifying key influencing factors like company size and new energy proportion to support sustainable market development.

Contribution

It develops an integrated evaluation framework for carbon finance levels and identifies significant influencing factors using advanced decision analysis methods.

Findings

Company size significantly impacts carbon finance levels.

Proportion of new energy generation influences carbon finance.

The proposed index effectively evaluates regional carbon finance status.

Abstract

Faced with increasingly severe environmental problems, carbon trading markets and related financial activities aiming at limiting carbon dioxide emissions are booming. Considering the complexity and urgency of carbon market, it is necessary to construct an effective evaluation index system. This paper selected carbon finance index as a composite indicator. Taking Beijing, Shanghai, and Guangdong as examples, we adopted the classic method of multiple criteria decision analysis (MCDA) to analyze the composite indicator. Potential impact factors were screened extensively and calculated through normalization, weighting by coefficient of variation and different aggregation methods. Under the measurement of Shannon-Spearman Measure, the method with the least loss of information was used to obtain the carbon finance index (CFI) of the pilot areas. Through panel model analysis, we found that company size, the number of patents per 10,000 people and the proportion of new energy generation were the factors with significant influence. Based on the research, corresponding suggestions were put forward for different market entities. Hopefully, this research will contribute to the steady development of the national carbon market.