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Green Finance and Ecological Footprint: Empirical Evidence from 13 Leading Countries in Green Financial Development

Author

Listed:
  • Bartosz Jóźwik

    (Department of International Economics, Institute of Economics and Finance, The John Paul II Catholic University of Lublin, 20-950 Lublin, Poland)

  • Sevgi Sümerli Sarigül

    (Department of Foreign Trade, Vocational School of Social Sciences, Kayseri University, 38280 Kayseri, Turkey)

  • Mesut Dogan

    (Department of Banking, Finance and Insurance, Vocational School of Bozüyük, Bilecik Seyh Edebali University, 11100 Bilecik, Turkey)

  • Murat Çetin

    (Department of Economics, Faculty of Economics and Administrative Sciences, Tekirdağ Namik Kemal University, 59030 Tekirdağ, Turkey)

  • Pınar Avci

    (Department of Marketing and Advertising, Vocational School of Marmaraereğlisi, Tekirdağ Namik Kemal University, 59030 Tekirdağ, Turkey)

  • Aytaç Güt

    (Department of Business, Faculty of Economic and Administrative Sciences, Tekirdağ Namık Kemal University, 59030 Tekirdağ, Turkey)

Abstract

This study investigates the long-run relationship between green finance and the ecological footprint in 13 countries with the highest levels of green financial development, while also examining the roles of green growth, economic growth, financial globalization, and capital formation. Using panel data from 1994 to 2020, the analysis applies advanced econometric techniques, including the Augmented Mean Group (AMG), Fully Modified Ordinary Least Squares (FMOLS), and Dynamic Ordinary Least Squares (DOLS) estimators to identify long-term effects. In addition, the Dumitrescu–Hurlin panel bootstrap causality test is used to explore the direction of relationships among variables. The results confirm the existence of cointegration among all variables. Green finance and green growth are found to reduce the ecological footprint, indicating their effectiveness in mitigating environmental degradation. In contrast, economic growth, financial globalization, and capital formation contribute positively to the ecological footprint, suggesting a link to increased environmental pressure. The causality analysis reveals a bidirectional relationship between green growth and ecological footprint, while green finance, economic growth, financial globalization, and capital are found to be causal factors of ecological footprint. The findings highlight the importance of promoting green finance and sustainable growth strategies while ensuring that financial and capital flows support environmental objectives.

Suggested Citation

  • Bartosz Jóźwik & Sevgi Sümerli Sarigül & Mesut Dogan & Murat Çetin & Pınar Avci & Aytaç Güt, 2025. "Green Finance and Ecological Footprint: Empirical Evidence from 13 Leading Countries in Green Financial Development," Sustainability, MDPI, vol. 17(23), pages 1-22, November.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:23:p:10509-:d:1801606
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