Exploring the drivers of carbon market risk: A meta regression analysis

An effective and sustainable management of carbon market requires a systematic control of associated risks. In this study, we use the Meta-analysis to explore the driving forces of carbon market risk based on 144 estimates reported in 35 primary studies. Moreover, we capture the sources of heterogeneity via the Meta-regression analysis. The perspective provided by the Meta-analysis allows us to reconsider the abnormal, mixed results, and gaps in carbon market risk researches. We find that external factors are the major driving forces for the potential risks in the carbon markets. Oil price, as the most associated economic factors, accounts for a significant driver of the risk. Environmental governance investment has negative impacts on the carbon market risks. Natural gas price, temperature and electricity price matter for the heterogeneity. Our results are robust to a battery of robustness check including the heterogeneity test, publication bias test and sensitivity analysis.