The relationship between risk perception and access to climate finance

Abstract

This study aims to clarify the relationship between risk perception and access to climate finance in Sub-Saharan African emerging economies. Information asymmetry and country risk are used as proxies to operationalise risk perception. It proposes a framework that illustrates the interaction between these independent variables to influence climate finance flows and outlines the importance of effective governance and transparency. The study is intended to expand the discourse on climate finance by providing an understanding of the nuances and barriers that emerging countries face in attracting climate investments. Research Design, approach and methodology - Through a quantitative research design, the study uses multiple regression analysis to examine secondary data collected from various SSA countries. Literature on risk perception, information asymmetry, and country risk complement this data to provide a comprehensive view of the factors affecting access to climate finance. Findings - The study reveals significant relationships between the variables, showing that higher risk perception negatively impacts access to climate finance, while improved information transparency positively correlates with increased finance flows. Additionally, findings show how low country risk enhances investor confidence. Limitations - Due to the quantitative nature of the study, findings may overlook crucial qualitative aspects that affect access. Therefore, recommendations are made for future research to explore these dynamics using qualitative approaches. Practical Implications - The paper provides actionable recommendations for policymakers and stakeholders to enhance governance frameworks and robustness in data transparency to mitigate perceived risks. Value - This study contributes to literature by filling a gap in the understanding of perceived risk and its influence on climate finance access, laying a foundation for future research and practical applications for improving climate finance flow.