Green finance and investment index for assessing scenario and performance in selected countries

• The Green Finance and Investment Index (GFII) reflects the green finance and investment ecosystem in the selected countries. • The GFI index is formulated on the basis of four broad dimensions of transparency, efficiency, efficacy and resilience. • The indicators of transparency and resilience are homogeneous emphasising that increasing transparency will help in building resilient infrastructure for green financing and investing. • Efficacy and efficiency are relatively more homogeneous to each other. • The UK is the top-ranked developed country, and China is the top-ranked developing country among the selected 15 top carbon-emitting countries. Globally, countries are engaged in developing strategies and undertaking initiatives for green transitioning of the financial system and achieving net-zero targets by 2050. Green transitioning of the financial system includes boosting green finance (GF) and green investment (GI) in the country. Countries are making initiatives to develop infrastructure and a conducive ecosystem to attract green finance and investment. The present study attempts to develop a green finance and investment index to evaluate the green financing and investing scenario of 15 selected countries. The study attempts to evaluate countries on the basis of four integral dimensions viz., transparency, resilience, efficacy and efficiency. The dimensions include 29 variables, representing 11 parameters identified through a comprehensive literature review and experts' inputs. Multiple-factor analysis is applied to develop the index and rank the countries. The results show that the UK is ranked first, followed by Germany, the USA and Japan. These countries have taken initiatives to include environmental financing in the legal and regulatory framework. Among the developing countries, China is ranked seventh, followed by Mexico, Brazil and Indonesia. The results show that transparency and resilience dimensions are homogeneous to each other. Likewise, efficiency and efficacy are relatively more homogeneous to each other. Transparency plays the prominent role in developing GFI ecosystem. The study recommends that by improving transparency in regulations will positively impact the resilience of the country. Improving efficacy will result in increasing efficiency in the countries. The findings of the study contributes to the literature on quantitative analysis of green finance and investment. The results can contribute to the decision-making of the policymakers for devising an appropriate policy by strategically addressing the critical variables in each dimension. Lastly, the study can provide the foundation for analysing the green finance and investment ecosystem and the performance of the countries over the period of time.