Financial Instruments for Decarbonization: Likely Pathways in the Romanian Economy

The article explores which financial instruments have the highest potential to deliver the transition to a low-carbon economy in Romania, given the structure of the national economy. Based on a Scopus comprehensive query resulting in 364 analysed articles on green and sustainable finance in Romania, the paper fills a research gap by looking not only at stakeholders' perception of this emerging field in Romania or by describing different kinds of green financial instruments, but by analysing which instruments are most likely to have the highest leverage and impact to mobilize finance towards decarbonizing the local economy. The banking sector in Romania accounts for 75% of total financial system assets, total net assets in the Romanian banking sector amounting to approx. 140 bio. EUR and dwarfing the Stock Exchange, bonds, European Structural and Investment Funds, etc. While green bonds have seen double digit growths, green loans and other banking instruments (debt denial, etc.) have the highest potential to decarbonize the national economy most effectively.