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Exploring the Impact of Green Finance and Green Innovation on Resource Efficiency: The Mediating Role of Market Regulations and Environmental Regulations

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  • Xiaoping Tang

    (School of Economics, Guizhou University, Guiyang 550025, China)

  • Qiong Wang

    (School of Economics, Guizhou University, Guiyang 550025, China)

  • Shamsa Noor

    (Department of Economics, The Islamia University of Bahawalpur, Bahawalpur 63100, Pakistan)

  • Rabia Nazir

    (Department of Economics, The Islamia University of Bahawalpur, Bahawalpur 63100, Pakistan)

  • Muhammad Junaid Nasrullah

    (Department of Economics, The Islamia University of Bahawalpur, Bahawalpur 63100, Pakistan)

  • Phool Hussain

    (Faculty of Management, Prague University of Economics and Business, 37701 Jindrichuv Hradec, Czech Republic)

  • Shahbaz Ali Larik

    (College of Economics, Sichuan Agricultural University, Chengdu 611130, China)

Abstract

Green finance, innovation, and resource efficiency have gained significant traction recently, particularly in resource-rich countries. This study investigates the role of green finance and innovation in resource efficiency with the mediating lens of environmental regulations and market rules. The study employs a structural equation model on a panel of 15 resource-rich countries from 1995 to 2023. The findings illustrate a complicated interplay between the variables. First, the findings show that green financing positively and negatively affects resource efficiency. In contrast, green innovation constantly improves resource efficiency. Market rules have a favorable impact on resource efficiency. Environmental laws, however, hurt resource efficiency. Furthermore, the study reveals that green financing favors market regulations, implying that financial expenditures in green initiatives might strengthen regulatory frameworks that promote market efficiency. In contrast, green finance harms environmental rules, and green innovation harms both market and environmental regulations. In addition, we divided the sample into developed and developing nations and offered a sub-group analysis to take into consideration the variations in the degree of national development and green advances to further improve the analysis. Overall, the study emphasizes the multifaceted role of green finance and innovation in increasing resource efficiency within regulatory frameworks. These findings are critical for policymakers and stakeholders in resource-rich countries seeking to reconcile economic growth with sustainable development.

Suggested Citation

  • Xiaoping Tang & Qiong Wang & Shamsa Noor & Rabia Nazir & Muhammad Junaid Nasrullah & Phool Hussain & Shahbaz Ali Larik, 2024. "Exploring the Impact of Green Finance and Green Innovation on Resource Efficiency: The Mediating Role of Market Regulations and Environmental Regulations," Sustainability, MDPI, vol. 16(18), pages 1-26, September.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:18:p:8047-:d:1478327
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    References listed on IDEAS

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    Cited by:

    1. Dianwu Wang & Zina Yu & Haiying Liu & Xianzhe Cai & Zhiqun Zhang, 2025. "Exploring the Relationship Between Green Finance and Carbon Productivity: The Mediating Role of Technological Progress Bias," Sustainability, MDPI, vol. 17(19), pages 1-18, September.
    2. Agha Amad Nabi & Farhan Ahmed & Fayaz Hussain Tunio & Muhammad Hafeez & Daniela Haluza, 2025. "Assessing the Impact of Green Environmental Policy Stringency on Eco-Innovation and Green Finance in Pakistan: A Quantile Autoregressive Distributed Lag (QARDL) Analysis for Sustainability," Sustainability, MDPI, vol. 17(3), pages 1-18, January.
    3. Phool Hussain & Saud Ahmad & Jindřich Soukup, 2026. "From mines to markets: how value-added critical minerals and green innovation stabilize energy security amid regulatory quality in resource-rich countries," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 39(1), pages 295-310, March.

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