Does Green Financing affect the Sustainable Economic Growth of Emerging Economies? Evidence from Panel ARDL Model

Pachiyappan Sathish (), Balakrishnan Reshma, Joseph Augustine, Patil Anand, Arjun B. S and Gowri Shankar R
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Pachiyappan Sathish: School of Business and Management, Christ University, Bengaluru, India
Balakrishnan Reshma: School of Business and Management, Christ University, Bengaluru, India
Joseph Augustine: Department of Economics, Christ University, Bengaluru, India
Patil Anand: School of Business and Management, Christ University, Bengaluru, India
Arjun B. S: School of Business and Management, Christ University, Bengaluru, India
Gowri Shankar R: School of Business and Management, Christ University, Bengaluru, India

Economics, 2025, vol. 13, issue 4, 39-53

Abstract: This study examines the nexus between green finance determinants and sustainable economic growth in Brazil, India, China, and South Africa using a panel Autoregressive Distributed Lag (ARDL) approach. These rapidly developing countries face the dual challenge of maintaining economic growth while addressing environmental sustainability. The analysis focuses on five key independent variables: Comparative Advantage in Low Carbon Technology Products, Total Trade in Low Carbon Technology Products, Trade Balance in Low Carbon Technology Products, Annual CO2 Emissions, and Lack of Coping Capacity. Short-run results indicate that Total Trade in Low Carbon Technology Products negatively affects GDP, suggesting that while green trade is expanding, it currently lacks stable, revenue-generating mechanisms. Annual CO2 Emissions and Lack of Coping Capacity positively influence GDP in the short term, reflecting continued dependence on emission-intensive industries and limited infrastructure for resilience. Comparative Advantage and Trade Balance in Low Carbon Technology Products are statistically insignificant in the short run, implying delayed economic benefits. In the long run, none of the green finance indicators show a significant relationship with GDP, possibly due to the substantial upfront investments required for green projects, which delay economic returns. The study underscores the need for strategic investments in technology, infrastructure, and governance to align economic growth with long-term sustainability goals.

Keywords: Emerging Economies; Green Finance; Sustainable Economic Growth; Low Carbon Technology Products; Environmental Sustainability (search for similar items in EconPapers)
JEL-codes: C33 O57 Q01 Q55 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:econom:v:13:y:2025:i:4:p:39-53:n:1003

DOI: 10.2478/eoik-2025-0084

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