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<p>This study examines how financial volatility risk affects foreign green energy investments across 38 African countries from 2003 to 2023, and whether digital economy moderates this relationship. The given study utilized fixed effect with Driscoll-Kraay (DK) standard errors, IV-2SLS with DK, and two-step system GMM to investigate these nexus. Drawing on real-option theory, we find that financial volatility risk has a negative influence on foreign green energy investment for African economies. Further, we find that this negative impact is more pronounced in economies with low levels of ESG (economic, social, and governance), institutional quality, economic development, high level of national cultural secrecy, and over-financialization. Leveraging information asymmetry and signaling theory, we find that digital economy development significantly moderates and weakens the negative impact of financial volatility risk on foreign green energy investments. Additionally, we find that physical climate risk has a significant negative effect on dependent variable of the study, and digital economy effectively weakens this relationship.</p>

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Does the digital economy mitigate the effect of financial volatility risk on foreign green energy investment? evidence from African economies

  • 期刊论文

  • 发表日期：

    2026年7月22日

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  • Muhammad Hussain,
  • Jianjun Zhang

摘要

This study examines how financial volatility risk affects foreign green energy investments across 38 African countries from 2003 to 2023, and whether digital economy moderates this relationship. The given study utilized fixed effect with Driscoll-Kraay (DK) standard errors, IV-2SLS with DK, and two-step system GMM to investigate these nexus. Drawing on real-option theory, we find that financial volatility risk has a negative influence on foreign green energy investment for African economies. Further, we find that this negative impact is more pronounced in economies with low levels of ESG (economic, social, and governance), institutional quality, economic development, high level of national cultural secrecy, and over-financialization. Leveraging information asymmetry and signaling theory, we find that digital economy development significantly moderates and weakens the negative impact of financial volatility risk on foreign green energy investments. Additionally, we find that physical climate risk has a significant negative effect on dependent variable of the study, and digital economy effectively weakens this relationship.