Green Finance as a Catalyst for Sustainable Development: An Application of Fourier Augmented ARDL Model

Green finance has emerged as a strategic instrument for promoting sustainable development (SD), particularly in emerging and resource-dependent economies that are facing rising environmental pressures and carbon emissions. However, existing studies often provide fragmented evidence, rely on single-country analyses or use limited proxies for green finance, leaving important gaps in understanding its comprehensive role across diverse contexts. In this context, this study investigates whether green finance contributes to SD in the BRICS countries and Saudi Arabia over the period 2001–2024. Using a balanced annual panel dataset, the analysis employs fixed-effects estimation as the baseline approach and System Generalized Method of Moments as a robustness check to address heterogeneity, dynamic persistence and endogeneity. Green finance is measured through three dimensions — green credit, green securities and green investment — while carbon emissions, foreign direct investment (FDI), economic growth, trade openness (TO) and natural resource rent are included as control variables. The results reveal that all dimensions of green finance have a positive and statistically significant impact on SD, whereas carbon emissions have a negative effect. FDI contributes positively, whereas economic growth and TO have generally supportive effects. This study provides one of the first integrated and up-to-date comparative analyses of the BRICS countries alongside Saudi Arabia using a multidimensional green finance framework and recent data up to 2024, offering a more comprehensive perspective than prior studies. These findings have clear implications for strengthening green financial systems and advancing SD strategies.