When Does Green Finance Promote Inclusive Green Growth? New Evidence from Developing Countries

Isaac K. Ofori

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Despite growing international commitments to green finance, it remains an open empirical question whether such transfers translate into inclusive green growth (IGG) in developing countries. This study addresses this gap by examining how countries' levels of development and executive corruption condition the effects of green finance on IGG. To this end, we draw on a comprehensive sample of 99 developing countries spanning 2000-2024 and employ instrumental-variable and quantile regression techniques for the analysis. Three clear findings emerge. First, we find robust evidence that green finance promotes IGG, but only in low-income countries. Second, we show that executive corruption significantly reduces the IGG-enhancing effects of green finance in low-income countries, whereas no comparable effect is observed in higher-income developing countries. Third, the evidence reveals notable heterogeneity in the conditional distribution of IGG, with countries at the lower end of IGG performance experiencing relatively larger gains from green finance. Overall, the findings indicate that the effectiveness of green finance in promoting inclusive green growth depends critically on countries' levels of development and the prevalence of executive corruption

Keywords: Corruption; Developing countries; Green finance; Inclusive green growth (search for similar items in EconPapers)
JEL-codes: D73 F35 O11 O13 Q56 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-dev and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:343605

DOI: 10.20944/preprints202608.0374.v1

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