Reducing road freight transport carbonization level and problems of "Green Financing" by commercial banks in Latvia

Abstract

In this article, the authors shall conduct a study of road freight transport impact on air pollution. The objective of the presented study shall conclude in reduction of carbonization level by the road freight transport in Latvia, and in attraction of Latvian commercial banks to "green financing". 

            In the course of the study, the authors have put forward the following hypotheses: the volume of investments in environmental protection shall be associated with EURIBOR interest rate: environmental pollution shall depend on the EURIBOR interest rate. The authors have demonstrated that 74% of the Latvian truck fleet has a high level of wear and tear, which shall lead to an increase in CO2 air pollution. This could be a direction for the "green financing" by the commercial banks. However, the commercial banks refuse to finance "green projects" due to unstable regulatory framework, political risks, as a result of which the "green financing" shall be in the "high risk" group, which, in its turn, shall entail the application of the higher interest rates. In the context of instability of business activity in the field of the road freight transport, the risk of non-repayment of borrowed funds shall increase. The following methods have been used for conduction of the study: the first empirical approach has been a modified method of group discussion, referring to accompanying literature study which represented the first part of triangulation as a study strategy. This has made it possible to put forward hypotheses. In the next stage of the triangulation, a quantitative preliminary study of statistical indicators has been conducted: volume of the road freight transport, air pollution, service life of the truck fleet, volume of the environmental financing and Euribor interest rate. The main focus of the quantitative preliminary and main study has been on the empirical collection of reproducible data. Based on a partial least square’s structural equation modeling (PLS-SEM) approach has been testing of the proposed hypotheses. This procedure has been aimed at investigating cause-and-effect relationships