The Role of Islamic Finance in stimulating Green Growth in Several Asian Countries

Sustainable development is oriented toward the welfare of humanity. The green economy applies economic growth followed by environmental ‎sustainability. Muslim communities have implemented the Sustainable Development Goals by establishing Islamic financial institutions. ‎Purposes of this research is to determine the role of Islamic finance in stimulating green growth in several Asian countries. The study uses ‎green growth as the dependent variable and Islamic finance as the independent variable, while Foreign Direct Investment, innovation, trade, ‎and population as control variables. The sampling was conducted using purposive sampling in the Asian region from 2018-2022, and selected samples were obtained from Saudi Arabia, Malaysia, Indonesia, Pakistan, Qatar, Kazakhstan, Azerbaijan, and Thailand. Generalized ‎Method of Moments is used as a method. Results of this study indicate that green growth in the previous period, Islamic finance, foreign ‎direct investment, and innovation have One Step GMM and Two Step GMM estimation results that are positively and significantly influential on green growth. Trade and population size yield One Step GMM and Two Step GMM estimates that are not significant but have the ‎appropriate direction. To that end, trade needs to be given supportive policies such as providing incentives for green investment, strengthening environmental regulations, and international cooperation in the transfer of green technology. Overpopulation can lead to the exploitation ‎of natural resources, so it is necessary to control the population immediately and at the same time strive to make them trustworthy individuals‎.