Nexus among Ecological Footprint, Green Finance and Renewable Energy Consumption: A Global Perspective

Kinza Sadiq, Amjad Ali, Muhammad Usman and Fiaz Ahmad Sulehri

MPRA Paper from University Library of Munich, Germany

Abstract: Environmental sustainability has become a pressing concern amid accelerating industrialization and economic growth, which have collectively intensified ecological degradation. This study investigates the interconnected roles of green finance and renewable energy consumption in influencing ecological footprints across developed and developing countries from 1995 to 2021. Drawing on ecological modernization theory and sustainable development theory, the analysis employs panel least squares and generalized method of moments methods to examine data from fifty-four countries, using ecological footprint as the dependent variable, while renewable energy consumption and green finance are key explanatory factors. Empirical findings indicate that non-renewable energy consumption significantly increases ecological footprints in all regions, whereas renewable energy reduces ecological impact most notably in developed countries. Green finance contributes to environmental improvement in advanced economies but exhibits a positive correlation with ecological footprint in developing countries, likely due to the transitional nature of green investments. Population density consistently shows a mitigating effect on ecological degradation. These results underscore the importance of tailored green finance policies, technology transfer, and renewable energy expansion, particularly in developing nations, to support global sustainability targets.

Keywords: Ecological Footprint; Green Finance; Renewable Energy Consumption; Sustainability (search for similar items in EconPapers)
JEL-codes: Q2 Q5 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124498

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