Combining the financial development and stock market return for green economic recovery in selected developing economies

Jin Sheng () and Yubin Gao ()
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Jin Sheng: Zhejiang Wanli University
Yubin Gao: Beijing Technology and Business University

Economic Change and Restructuring, 2023, vol. 56, issue 6, No 7, 3885-3908

Abstract: Abstract By endogenizing foreign direct investment (FDI), trade openness, and economic growth, we analyze the influence of stock market development on the green economic recovery using the panel dataset for selected developing economies from the period of 2000 to 2020. The unique panel quantile regression (PQR) approach is used to examine the impact of stock market–green recovery nexus. Importantly, our empirical findings explain the effect of stock markets on the development of green economic recovery in the selected developing economies. According to the results, increasing trade openness and economic development have a considerable impact on technological innovation and reducing the emission of GHGs. Additionally, PQR data show that green recovery initiatives are encouraged in developing economies with high (0.70) quantile stock markets where equity markets are comparatively more developed are encouraged. By promoting trade openness in developing economies, financial development promotes green economic recovery. Our study also contributes significantly to the empirical literature and makes crucial recommendations for policy formation.

Keywords: Foreign direct investment; Green recovery; Equity market; Trade openness; Panel data; Developing economies (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10644-022-09454-9

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