IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v18y2025i3p140-d1607799.html
   My bibliography  Save this article

The Role of Innovation Development in Advancing Green Finance

Author

Listed:
  • Aleksy Kwilinski

    (Institute for Sustainable Development and International Relations, WSB University, 41-300 Dabrowa Gornicza, Poland
    The London Academy of Science and Business, Unit 3, Office A, 1st Floor, 6–7 St Mary at Hill, London EC3R 8EE, UK
    Department of Marketing, Sumy State University, 116, Kharkivska St., 40007 Sumy, Ukraine)

  • Oleksii Lyulyov

    (Institute for Sustainable Development and International Relations, WSB University, 41-300 Dabrowa Gornicza, Poland
    Department of Marketing, Sumy State University, 116, Kharkivska St., 40007 Sumy, Ukraine)

  • Tetyana Pimonenko

    (Institute for Sustainable Development and International Relations, WSB University, 41-300 Dabrowa Gornicza, Poland
    Department of Marketing, Sumy State University, 116, Kharkivska St., 40007 Sumy, Ukraine)

Abstract

This study aims to investigate how innovation development drives green finance in the Visegrad countries by analyzing the role of R&D investments, high-tech trade, and patent activity in attracting greenfield investments. Using a vector autoregression (VAR) model with data from 2007 to 2022, this study employs forecasting techniques, impulse response functions, and variance decomposition analyses to assess the dynamic relationship between innovation and green financial flows. The findings reveal that R&D expenditures are the strongest driver of green investments, explaining over 93% of the variance in Poland and Hungary. High-tech trade significantly influences investment trends, contributing up to 84% of the variance in the Czech Republic, while patent applications initially boost greenfield investments but show diminishing returns over time. Although innovation-driven investments remain stable overall, the impact of trade and patents varies across countries, reflecting regional differences. This study identifies key challenges, such as commercialization gaps and policy disparities, highlighting the need for targeted financial and innovation policies. To sustain green finance growth, policymakers should expand R&D funding, strengthen trade infrastructure, and enhance intellectual property commercialization. Additionally, financial institutions and investors should play a more active role in developing green investment markets to support long-term economic resilience and sustainability.

Suggested Citation

  • Aleksy Kwilinski & Oleksii Lyulyov & Tetyana Pimonenko, 2025. "The Role of Innovation Development in Advancing Green Finance," JRFM, MDPI, vol. 18(3), pages 1-26, March.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:3:p:140-:d:1607799
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/18/3/140/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/18/3/140/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Clarence Tolliver & Hidemichi Fujii & Alexander Ryota Keeley & Shunsuke Managi, 2021. "Green Innovation and Finance in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 16(1), pages 67-87, January.
    2. Viera Labudova & Iveta Fodranova, 2024. "The Impact of Socio-Economic Factors on Digital Skills in the Population of the EU 27 Countries," Virtual Economics, The London Academy of Science and Business, vol. 7(3), pages 81-103, September.
    3. Li, Lin & Du, Le, 2024. "Impact of natural resources, financial innovation, and policy robustness on economic growth: A study of China and India," Resources Policy, Elsevier, vol. 93(C).
    4. Chi, Yi & Hu, Ning & Lu, Dong & Yang, Yang, 2023. "Green investment funds and corporate green innovation: From the logic of social value," Energy Economics, Elsevier, vol. 119(C).
    5. Alfonso Infante-Moro & Juan C. Infante-Moro & Julia Gallardo-Pérez & Francisco J. Martínez-López, 2022. "Key Factors in the Implementation of E-Proctoring in the Spanish University System," Sustainability, MDPI, vol. 14(13), pages 1-16, July.
    6. Sohail Abbas & Ghulam Dastgeer & Samia Nasreen & Shazia Kousar & Urooj Riaz & Saira Arsh & Muhammad Imran, 2024. "How Financial Inclusion and Green Innovation Promote Green Economic Growth in Developing Countries," Sustainability, MDPI, vol. 16(15), pages 1-19, July.
    7. Ozili, Peterson Kitakogelu, 2022. "Green finance research around the world: a review of literature," MPRA Paper 114899, University Library of Munich, Germany.
    8. He, Guohua & Zhu, Peiling & Wu, Changjun, 2024. "Financial innovation, green investment, and sustainable mineral extractions in China," Resources Policy, Elsevier, vol. 90(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peng Liang & Xinhui Sun, 2024. "Does digital transformation promote the green innovation of China’s listed companies?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 22199-22235, September.
    2. Maria V. Sigova & Igor K. Klyuchnikov & Oleg I. Klyuchnikov, 2024. "Sustainability and Security of Green Finance from the Multi-agent Games Perspective," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 78-95, February.
    3. Ghaemi Asl, Mahdi & Ben Jabeur, Sami & Ben Zaied, Younes, 2024. "Analyzing the interplay between eco-friendly and Islamic digital currencies and green investments," Technological Forecasting and Social Change, Elsevier, vol. 208(C).
    4. Alistair Munro, 2021. "Comment on “Green Innovation and Finance in Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 16(1), pages 88-89, January.
    5. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
    6. Lee, Chien-Chiang & Wang, Fuhao & Chang, Yu-Fang, 2023. "Towards net-zero emissions: Can green bond policy promote green innovation and green space?," Energy Economics, Elsevier, vol. 121(C).
    7. Lu, Xunfa & Huang, Nan & Mo, Jianlei & Ye, Zhitao, 2023. "Dynamics of the return and volatility connectedness among green finance markets during the COVID-19 pandemic," Energy Economics, Elsevier, vol. 125(C).
    8. Wang, Quan-Jing & Wang, Hai-Jie & Chang, Chun-Ping, 2022. "Environmental performance, green finance and green innovation: What's the long-run relationships among variables?," Energy Economics, Elsevier, vol. 110(C).
    9. Wen, Jun & Zhang, Sen & Chang, Chun-Ping & Anugrah, Donni Fajar & Affandi, Yoga, 2023. "Does climate vulnerability promote green investment under energy supply restriction?," Energy Economics, Elsevier, vol. 124(C).
    10. Xie, Peijun & Jamaani, Fouad, 2022. "Does green innovation, energy productivity and environmental taxes limit carbon emissions in developed economies: Implications for sustainable development," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 66-78.
    11. Hao, Xiaoli & Li, Ke & Ren, Siyu & Sun, Qingyu & Hu, Weitao & Xue, Yan, 2024. "How green investment significantly relieves resource curse? A new perspective from fiscal decentralization," Resources Policy, Elsevier, vol. 94(C).
    12. Jiang, Wenbing & Du, Lei & Wei, Huafei & Sun, Helin, 2024. "The influence of urban new energy development orientation on new energy technology innovation in firms," Renewable Energy, Elsevier, vol. 237(PD).
    13. MingCan JI & Xing Zhang, 2024. "Assessing the Impacts and Mechanisms of Green Bond Financing on the Enhancement of Green Management and Technological Innovation in Environmental Conservation Enterprises," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 12709-12750, September.
    14. Yoshida, Kenichi & Iino, Yoshiaki & Managi, Shunsuke, 2022. "Do Japanese keiretsu promote better CSR activities?," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 452-475.
    15. Serenella Caravella & Valeria Costantini & Francesco Crespi, 2021. "Mission-Oriented Policies and Technological Sovereignty: The Case of Climate Mitigation Technologies," Energies, MDPI, vol. 14(20), pages 1-16, October.
    16. Ken‐Ichi Akao, 2021. "Comment on “Green Innovation and Finance in Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 16(1), pages 90-91, January.
    17. Tang, Xiaobo & Yao, Xingyuan & Dai, Ruyi & Wang, Qian, 2024. "Does green matter for crowdfunding? International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    18. Sedat Baştuğ & Ersin Fırat Akgül & Hercules Haralambides & Theo Notteboom, 2024. "A decision-making framework for the funding of shipping decarbonization initiatives in non-EU countries: insights from Türkiye," Journal of Shipping and Trade, Springer, vol. 9(1), pages 1-27, December.
    19. Ma, Hongmei, 2024. "Role of green innovation and green finance on green recovery: Analysis of natural resources rents," Resources Policy, Elsevier, vol. 89(C).
    20. Marwan Mansour & Mohammad Fawzi Shubita & Abdalwali Lutfi & Mohammed W. A. Saleh & Mohamed Saad, 2024. "Female CEOs and Green Innovation: Evidence from Asian Firms," Sustainability, MDPI, vol. 16(21), pages 1-20, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:18:y:2025:i:3:p:140-:d:1607799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.