Energy is a critical input in modern economic systems. Its influence on various parts of economic performance has been widely investigated. Traditionally, energy prices, such as oil prices, are considered to be determined by supply and demand in international markets. Hamilton (2009), for example, suggests that increasing demand in emerging economies (e.g., China), failure to increase oil supply, and low price elasticity are the main reasons for price increases before 2008.Fundamental factors were important in understanding oil price changes prior to 2008. They largely failed to explain what happened afterward. The extremely volatile price dynamics cannot simply be due to changes in the fundamentals. Fattouh and Mahadeva (2012) provide an alternative explanation based on the notion of oil financialization-which has been explored intensively in the recent literature (see, e.g., Creti and Nguyen 2015; Zhang 2017; Zhang and Ji 2018). A large number of studies also investigate issues such as the relationship between energy price shocks and financial markets, financing and investment decisions made by energy firms, and carbon finance and green finance. These studies have naturally coalesced into a common research theme-energy finance, a subject of growing interest among academic researchers.In addition, since the 2008 global financial crisis, international energy markets have become more closely linked with financial markets, and energy prices have exhibited more financial characteristics. As a result, it is critical to further study energy market issues from a financial perspective. Indeed, the strategic importance of energy and climate change gives financial issues a unique relevance for both academia and policy makers, which inevitably leads to a further separation of energy finance from general financial research.The concept of energy finance, however, is vague and has no clear definition, which may create constraints on its further development. This special issue therefore aims to provide a platform for discussions on the most recent developments in energy finance and contribute to clarification of the concept of energy finance.
What Is Energy Finance?Energy finance is inherently interdisciplinary. It starts with exploring the linkages between energy markets and financial markets but then requires us to look at energy products/markets from a financial perspective. To further clarify this concept, we elaborate on the following six broad themes based on a brief review of the relevant literature, though the concept is not limited to them.
Energy and Financial MarketsChen, Roll, and Ross (1986) are perhaps the first to investigate the role of oil price risk in stock markets, though their findings do not support a separate role for oil. Jones and Kaul (1996) investigate the reaction of international stock markets to oil shocks in a number of developed economies and