Effects of Green Finance on Economic Growth and Renewable Energy in Developing Countries: A Panel Cointegration Analysis

ABSTRACT This empirical study examines the impact of green finance on economic growth and renewable energy in a group of 76 developing nations in 2010–2019. Results from a cointegration analysis, vector error correction model, and Granger causality test confirm a cointegrating relationship between green finance, renewable energy, economic growth, and other control variables. Green finance has a significant and positive (increasing) impact on growth (in both the short and long run) and renewable energy (long run), whereas renewable energy also has a significant and positive impact on growth (long run). Therefore, this study recommends that policymakers promote the use of both green finance and renewable energy because both offer many benefits, including lower carbon emissions and higher economic growth, and may therefore provide practical solutions to environmental problems.