Does temperature influence the carbon index? Evidences from India

• Published date: 01 February 2021
• Author: Chinnadurai Kathiravan,Murugesan Selvam,Balasundram Maniam,Sankaran Venkateswar,Marxia Oli Sigo
• Date: 01 February 2021
• DOI: http://doi.org/10.1002/pa.2117

ACADEMIC PAPER

Does temperature influence the carbon index? Evidences from

India

Chinnadurai Kathiravan

1

| Murugesan Selvam

1

| Balasundram Maniam

2

|

Sankaran Venkateswar

3

| Marxia Oli Sigo

4

1

Department of Commerce and Financial

Studies, Bharathidasan University,

Tiruchirappalli, Tamil Nadu, India

2

Sam Houston State University, Huntsville,

Texas

3

School of Economics and Business

Administration, Saint Mary's College of

California, Moraga, California

4

National Institute of Technology Sikkim,

Ravangla, Sikkim, India

Correspondence

Chinnadurai Kathiravan, Department of

Commerce and Financial Studies,

Bharathidasan University, Tiruchirappalli, Tamil

Nadu 620024, India.

Email: kathirnba@gmail.com

The present study investigates the impact of temperature, on the returns of the Car-

bon Index, otherwise called BSE GREENEX in India. The study employed the second-

ary data of temperature in five sample cities (Chennai, Delhi, Hyderabad, Kolkata,

and Mumbai), and the BSE GREENEX in India. Statistical tools like Descriptive Statis-

tics, Unit Root, OLS Regression Test, and Granger Causality Test, were used. This

study would be useful for the investors to make green investment in India.

1|INTRODUCTION

According to the Intergovernmental Panel on Climate Change

(IPCC) at the mid part of the 21st century, majority of continents

like Australia, Asia, and Europe are expected to suffer from tem-

perature issues. Besides, Europe and North America would experi-

ence unusual rain fall throughout the year. They all witness

climate change as alerted by IPCC. Hence there is an urgent need,

for developing solution, for the problems of climate changes.

Weather factors generally influence individual attitudes, which

can be proved through different psychological studies, already

undertaken in the area of weather effect on stock market, in dif-

ferent parts of the world (Cao & Wei, 2005; Goetzmann and

Zhu (2005); Lee and Wang, 2011; Lu & Chou, 2012; Yoon & Kang,

2009). Recent academic research studies found that people gener-

ally make correct decision when they are in a feel in happy mood.

The decision-making process, conceived as the risk-as-feelings

model (Loewenstein, Weber, Hsee, & Welch, 2001) is provided in

Figure 1. The role of individual feelings in finance or stock market

was studied early in USA, by Saunders (1993). This study raved

the way for a number of follow-up works, on the same area, in dif-

ferent parts of the world.

1.1 |BSE GREENEX

The present study analyzed the BSE GREENEX Index in India, as it

is the first eco-friendly index developed by the BSE in India. This

index include top 20 companies, on the basis of their carbon emis-

sions capacity. The main purpose of the index is to encourage and

promote green investment in India. The conceptual framework,

showing the impact of temperature on stock market is given in

Figure 2.

The remaining section of the study has been organized, as fol-

lows. Section 2 reviews the related literature. Section 3 provides the

methodology of the present study while Section 4 displays the results

and interpretation. The final section concludes the study and exam-

ines the scope for future researchers.

2|LITERATURE REVIEW

The stock price could be influenced by climate change also because

could be influenced investors' feelings and moods. The literature

review of this study gives a brief review of studies, relating to weather

factors like temperature and stock markets.

Received: 27 November 2019 Accepted: 8 March 2020

DOI: 10.1002/pa.2117

J Public Affairs. 2021;21:e2117. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons, Ltd 1of8

https://doi.org/10.1002/pa.2117