Title: Climate policy uncertainty and financial resilience: assessing asymmetric risks and regulatory responses

Authors: Salma Gallas; Hayet Ben Haj Hamida; Houssam Bouzgarrou

Addresses: IHEC – Sousse, University of Sousse, Route de la ceinture Sahloul 3, BP 40, 4054 Sousse, Tunisia ' IHEC – Tunis, University of Carthage, Rue Victor Hugo 2016, Carthage-Présidence, Tunisia ' ISFF – Sousse, University of Sousse, Rue 18 Janvier 1952 BP 436 Sousse 4000, Tunisia

Abstract: This study examines the asymmetric impacts of Climate Policy Uncertainty (CPU) on financial stability across developed and emerging economies, focusing on the role of climate change performance. The analysis reveals distinct short-term and long-term dynamics using a nonlinear autoregressive distributed lag (NARDL) model and data from 2006 to 2021. The findings indicate that reductions in CPU significantly enhance long-term financial stability, emphasising the need for stable climate policies. Interestingly, short-term fluctuations in CPU, whether upward or downward, appear to promote stability by encouraging cautious financial behaviour and risk aversion during uncertainty. Additionally, economies actively promoting renewable energy and implementing strict emission regulations demonstrate greater resilience to environmental and financial shocks. These results underscore the importance of well-structured climate policies and global cooperation in mitigating uncertainty surrounding climate policies. Policymakers are advised to implement consistent regulatory frameworks, encourage investments in renewable energy, and foster international collaboration to enhance financial resilience.

Keywords: climate policy uncertainty; nonlinear autoregressive distributed lag; NARDL; Climate Change Performance Index; CCPI; financial stability.

DOI: 10.1504/IJGE.2026.155231

International Journal of Green Economics, 2026 Vol.20 No.3, pp.309 - 330

Received: 06 Jul 2025
Accepted: 19 Jan 2026
Published online: 29 Jul 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article