Exploring the Influence of Economic Uncertainty, Financial Inclusion and Development on Green Investments in BRICS Economies Towards Achieving Sustainable Development Goals

The financial system plays a crucial role in supporting an economy’s ability to address environmental concerns and enhance its ability to withstand ecological risks, considering its financial requirements. To this end, the present study attempts to explore the impact of financial development, financial inclusion and economic uncertainty on green investments in BRICS economies towards achieving the sustainable development goals (SDGs), particularly SDG7 and SDG13. The study employs a robust set of econometric tools to achieve the aforementioned objectives. These tools include the cross-sectional dependency test to estimate cross-sectional dependency, the Westerlund cointegration test to check cointegration and heterogeneity, the cross-sectionally augmented panel unit root test (CIPS) and the cross-section augmented Dickey–Fuller (CADF) second-generation test to confirm stationarity properties, the augmented mean group (AMG) and common correlated effects mean group (CCEMG) to determine the long-run relationship, and the Dumitrescu and Hurlin test to estimate panel causality. The study confirms the presence of cross-sectional dependency and cointegration among the variables. The long-run estimate reveals that financial development, inclusion and economic growth have a positive role in increasing green investments; in contrast, economic policy uncertainty (EPU) reduces green investment in BRICS economies. The panel causality test reports a bi-directional causality between green investments, financial inclusion and economic growth, whereas a unidirectional causality exists between green investments, financial development and EPU. The study offers useful findings.