Does development in financial markets and institutions affect green growth? Empirical evidence from India

Abstract This study delves into the intricate connection between financial development and green growth in India. The study considers the development in financial institutions and financial markets as a proxy of financial development. By employing an autoregressive distributed lag model for the period 1990–2019, the results reveal a mixed impact of financial development on green growth in India. The study confirms a cointegrating relationship among the interested variables through the autoregressive distributed lag-bound test approach. Further, the results reported that financial institutions have a positive and statistically significant influence on green growth in India both in the short and long terms. However, financial markets have no statistically significant effect on green growth. These findings are important for policymakers, offering valuable insights into India’s intricate interplay between financial development and green growth. These findings suggest the way for targeted policy interventions to achieve green growth and better investment strategies in India’s economic landscape.