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The role of digital finance and financing barriers in green innovation: a Study of India

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  • Nenavath Sreenu

    (Maulana Azad National Institute of Technology Bhopal)

Abstract

Green innovation is essential for India's sustainable growth, yet small and medium firms generally struggle to finance it. Digital finance could help India overcome these limits and advance green technology in a rapidly digitalizing economy. This study uses panel data from 78 Indian cities from 2010 to 2023 to examine how digital financing affects green innovation quantity and quality. We found that digital finance improves green innovation by making financial resources accessible and lowering funding barriers. Southern cities benefit most, followed by northern and western regions, due to internet infrastructure and economic development differences. The study also tests endogeneity to ensure reliability. This research shows how digital financial inclusion may expedite green technical growth, helping policymakers link India's digital transformation with its climate and sustainability goals. Thus, improving digital banking ecosystems could help India achieve greener growth and a low-carbon future.

Suggested Citation

  • Nenavath Sreenu, 2025. "The role of digital finance and financing barriers in green innovation: a Study of India," Economic Change and Restructuring, Springer, vol. 58(5), pages 1-26, October.
    • Handle: RePEc:kap:ecopln:v:58:y:2025:i:5:d:10.1007_s10644-025-09923-x
    DOI: 10.1007/s10644-025-09923-x
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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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