Governance as a catalyst for green financial development: An investigation into financial inclusion, green technology innovation, and environmental regulations in Asian NDC countries

This study investigates the role of governance effectiveness (GE) in advancing green financial development (GFD) through financial inclusion (FI), green technology innovation (GTI), and environmental regulations (EnR). Using data from 13 Asian NDC countries between 2001 and 2023, the analysis employs the PMG-ARDL model and verifies its robustness using the FMOLS and DOLS methods. The results show that FI significantly enhances GFD, particularly under strong GE. EnR also exerts a positive effect on GFD, and its impact is amplified by GE, highlighting the importance of credible enforcement. In contrast, GTI has a negative direct effect on GFD due to high costs and institutional barriers, but its contribution becomes favorable when moderated by GE. These findings underscore GE's catalytic role in enabling FI, GTI, and EnR to contribute effectively to GFD. The study provides important policy implications, including enhancing digital infrastructure for FI, introducing R&D incentives and regulatory reforms to unlock GTI's potential, and strengthening monitoring and enforcement mechanisms for EnR. Overall, the study concludes that strong GE is essential for mobilizing FI, enabling Asian NDCs to meet their Paris Agreement commitments, and accelerating the transition to sustainable development.