Risk and retraction: asymmetric nexus between monetary policy uncertainty and eco-friendly investment

Monetary policy uncertainty casts long shadows, shaping the future of financial greenscapes by influencing investment decisions and sustainability initiatives, ultimately determining the pace of our transition to a greener, renewable energy-driven economy. This research analyses the asymmetric impact of monetary policy uncertainty on green finance in the top ten advocates of green funding (USA, China, Germany, UK, France, Sweden, Japan, the Netherlands, Canada, and Spain). Moving beyond traditional panel data methods that ignore country-specific nuances, we adopt the Quantile-on-Quantile approach for a more nuanced understanding. This approach enhances accuracy by offering a global overview and detailed insights for each country individually. The findings reveal that monetary policy uncertainty curtails green finance in most of the selected economies across various quantiles. Our estimation underscores the imperative for policymakers to conduct thorough analyses and develop strategies to address the changes in monetary policy uncertainty and green finance at various levels.