Impact of Green Finance Initiatives on Sustainable Economic Growth: A Comparative Study of Developed and Emerging Economies

Green finance has emerged as a transformative force in promoting sustainable economic growth and mitigating climate change. The financial sector now plays a pivotal role in directing capital towards environmentally beneficial projects, with instruments such as green bonds, sustainability-linked loans, and ESG-focused investments gaining prominence globally. This review explores the impact of green finance initiatives on sustainable economic growth, with a comparative lens on developed and emerging economies. It delves into the structural, institutional, and macroeconomic dynamics shaping green finance adoption and evaluates how such initiatives contribute to environmental sustainability, GDP growth, and renewable energy transitions. While developed economies exhibit robust frameworks, deeper capital markets, and higher green bond issuance, emerging economies face regulatory, infrastructural, and investment challenges—though their economic growth is often more responsive to green finance due to developmental gaps.