A Study of Stock Correlation Network in China's Green Finance Market

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Abstract
Green finance is a critical effort for promoting development that respects ecological balance while aiming for a zero-carbon footprint. This research, anchored in the paradigm of stock correlation network, scrutinizes 51 firms committed to environmental sustainability. It develops a stock correlation network model within the ambit of China's sustainable finance sector, based on the intricacies of stock price volatilities. The research delves into the influential mechanisms of systemically important entities within this market and undertakes a comparative analysis of key green financial policies. Empirical results indicate that elements including commitment to social and environmental duties, magnitude of research and development expenditure, and yields of ecological innovation notably influence the elevation of systemic significance rankings of distinct entities within the stock correlation matrices of China's sustainable finance market. Furthermore, the implementation of substantial policies related to sustainable finance has played a pivotal role in enhancing the systemic prominence of government-owned corporations. Consequently, this research enriches the utilization of complex network analysis within the sustainable finance domain and provides actionable recommendations for regulatory authorities to strengthen risk monitoring in the sustainable finance marketplace.

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