IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v32y2024i3p2709-2723.html
   My bibliography  Save this article

Do green finance, green technology innovation, and institutional quality help achieve environmental sustainability? Evidence from the developing economies

Author

Listed:
  • Litu Sethi
  • Biswanath Behera
  • Narayan Sethi

Abstract

One possible way to achieve sustainable economic growth is by limiting carbon dioxide (CO2) emissions. The developing countries, in particular, which significantly contribute to global carbon dioxide emissions, need a paradigm shift towards sustainable production and consumption to achieve economic growth while ensuring environmental sustainability. This study thus analyzes the role of green technology innovation, green finance, renewable energy use, institutional quality, and agricultural value added in attaining environmental sustainability by abating CO2 emissions for 25 select developing countries from 1998 to 2019. This study uses the Driscoll‐Kraay and two‐step SGMM estimators to assess the impact of independent variables on the response variable, acknowledging the endogeneity problem in the model. The empirical findings reveal that green finance, green technology innovation, and institutional quality induce CO2 emissions, whereas agricultural value‐added and renewable energy use are observed to have detrimental effects on CO2 emissions. Moreover, the moderation effect of green technology innovation and institutional quality with green finance is observed to have a weak and insignificant impact on CO2 emissions. The study thus recommends that developing countries enforce policies to promote investments and innovation in the clean energy sector to attain sustainable development goals by mitigating carbon emissions.

Suggested Citation

  • Litu Sethi & Biswanath Behera & Narayan Sethi, 2024. "Do green finance, green technology innovation, and institutional quality help achieve environmental sustainability? Evidence from the developing economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2709-2723, June.
    • Handle: RePEc:wly:sustdv:v:32:y:2024:i:3:p:2709-2723
    DOI: 10.1002/sd.2811
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.2811
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sd.2811?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Madaleno, Mara & Dogan, Eyup & Taskin, Dilvin, 2022. "A step forward on sustainability: The nexus of environmental responsibility, green technology, clean energy and green finance," Energy Economics, Elsevier, vol. 109(C).
    2. Mehmet Akif Destek & Ä°brahim Halil OÄŸuz & Nuh OkumuÅŸ, 2024. "Do Trade and Financial Cooperation Improve Environmentally Sustainable Development: A Distinction Between de facto and de jure Globalization," Evaluation Review, , vol. 48(2), pages 251-273, April.
    3. Fang, Zhen, 2023. "Assessing the impact of renewable energy investment, green technology innovation, and industrialization on sustainable development: A case study of China," Renewable Energy, Elsevier, vol. 205(C), pages 772-782.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    6. Tian, Xian-Liang & Bélaïd, Fateh & Ahmad, Najid, 2021. "Exploring the nexus between tourism development and environmental quality: Role of Renewable energy consumption and Income," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 53-63.
    7. Anasuya Haldar & Narayan Sethi, 2023. "The Effects of Renewable Energy, Innovation, and Governance on Climate Change and Economic Growth-Investigating the Opportunities and Challenges for Emerging Asia," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 4(2), pages 1-7.
    8. Farhad Taghizadeh-Hesary & Naoyuki Yoshino, 2020. "Sustainable Solutions for Green Financing and Investment in Renewable Energy Projects," Energies, MDPI, vol. 13(4), pages 1-18, February.
    9. Wang, Kai-Hua & Zhao, Yan-Xin & Jiang, Cui-Feng & Li, Zheng-Zheng, 2022. "Does green finance inspire sustainable development? Evidence from a global perspective," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 412-426.
    10. Sun, Huaping & Edziah, Bless Kofi & Sun, Chuanwang & Kporsu, Anthony Kwaku, 2019. "Institutional quality, green innovation and energy efficiency," Energy Policy, Elsevier, vol. 135(C).
    11. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LLC, vol. 7(3), pages 281-312, September.
    12. Sahoo, Malayaranjan & Sethi, Narayan & Angel Esquivias Padilla, Miguel, 2023. "Unpacking the dynamics of information and communication technology, control of corruption and sustainability in green development in developing economies: New evidence," Renewable Energy, Elsevier, vol. 216(C).
    13. Muhammad, Bashir, 2019. "Energy consumption, CO2 emissions and economic growth in developed, emerging and Middle East and North Africa countries," Energy, Elsevier, vol. 179(C), pages 232-245.
    14. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    15. Biswanath Behera & Puspanjali Behera & Narayan Sethi, 2024. "Decoupling the role of renewable energy, green finance and political stability in achieving the sustainable development goal 13: Empirical insight from emerging economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 119-137, February.
    16. Zhou, Mingxiang & Li, Xing, 2022. "Influence of green finance and renewable energy resources over the sustainable development goal of clean energy in China," Resources Policy, Elsevier, vol. 78(C).
    17. Siyu Ren & Yu Hao & Haitao Wu, 2022. "How Does Green Investment Affect Environmental Pollution? Evidence from China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(1), pages 25-51, January.
    18. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    19. Kaygusuz, Kamil, 2002. "Environmental impacts of energy utilisation and renewable energy policies in Turkey," Energy Policy, Elsevier, vol. 30(8), pages 689-698, June.
    20. Meng, Yue & Wu, Haoyue & Wang, Yunchen & Duan, Yinying, 2022. "International trade diversification, green innovation, and consumption-based carbon emissions: The role of renewable energy for sustainable development in BRICST countries," Renewable Energy, Elsevier, vol. 198(C), pages 1243-1253.
    21. Kuang, Hewu & Akmal, Zeeshan & Li, Feifei, 2022. "Measuring the effects of green technology innovations and renewable energy investment for reducing carbon emissions in China," Renewable Energy, Elsevier, vol. 197(C), pages 1-10.
    22. Danish I. Godil & Zhang Yu & Arshian Sharif & Rimsha Usman & Syed Abdul Rehman Khan, 2021. "Investigate the role of technology innovation and renewable energy in reducing transport sector CO2 emission in China: A path toward sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(4), pages 694-707, July.
    23. Chien, Fengsheng & Anwar, Ahsan & Hsu, Ching-Chi & Sharif, Arshian & Razzaq, Asif & Sinha, Avik, 2021. "The role of information and communication technology in encountering environmental degradation: Proposing an SDG framework for the BRICS countries," Technology in Society, Elsevier, vol. 65(C).
    24. Jin, Yi & Gao, Xiaoyan & Wang, Min, 2021. "The financing efficiency of listed energy conservation and environmental protection firms: Evidence and implications for green finance in China," Energy Policy, Elsevier, vol. 153(C).
    25. Jaewon Jung, 2020. "Institutional Quality, FDI, and Productivity: A Theoretical Analysis," Sustainability, MDPI, vol. 12(17), pages 1-17, August.
    26. Hooman Peimani, 2018. "Financial Barriers to Development of Renewable and Green Energy Projects in Asia," Working Papers id:12891, eSocialSciences.
    27. Asif Raihan & Almagul Tuspekova, 2022. "Dynamic impacts of economic growth, energy use, urbanization, tourism, agricultural value-added, and forested area on carbon dioxide emissions in Brazil," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(4), pages 794-814, December.
    28. Xu, Le & Fan, Meiting & Yang, Lili & Shao, Shuai, 2021. "Heterogeneous green innovations and carbon emission performance: Evidence at China's city level," Energy Economics, Elsevier, vol. 99(C).
    29. Xu, Jialong & Moslehpour, Massoud & Tran, Trung Kien & Dinh, Khai Cong & Ngo, Thanh Quang & Huy, Pham Quang, 2023. "The role of institutional quality, renewable energy development and trade openness in green finance: Empirical evidence from South Asian countries," Renewable Energy, Elsevier, vol. 207(C), pages 687-692.
    30. Kangyin Dong & Xiucheng Dong & Qingzhe Jiang, 2020. "How renewable energy consumption lower global CO2 emissions? Evidence from countries with different income levels," The World Economy, Wiley Blackwell, vol. 43(6), pages 1665-1698, June.
    31. Chen, Huanyu & Yi, Jizheng & Chen, Aibin & Peng, Duanxiang & Yang, Jieqiong, 2023. "Green technology innovation and CO2 emission in China: Evidence from a spatial-temporal analysis and a nonlinear spatial durbin model," Energy Policy, Elsevier, vol. 172(C).
    32. Jingyan Fu & Artie W. Ng, 2021. "Scaling up Renewable Energy Assets: Issuing Green Bond via Structured Public-Private Collaboration for Managing Risk in an Emerging Economy," Energies, MDPI, vol. 14(11), pages 1-16, May.
    33. Ayesha Afzal & Ehsan Rasoulinezhad & Zaki Malik, 2022. "Green finance and sustainable development in Europe," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 5150-5163, December.
    34. Arshian Sharif & Najia Saqib & Kangyin Dong & Syed Abdul Rehman Khan, 2022. "Nexus between green technology innovation, green financing, and CO2 emissions in the G7 countries: The moderating role of social globalisation," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1934-1946, December.
    35. Xi Chen & Zhigang Chen, 2021. "Can Green Finance Development Reduce Carbon Emissions? Empirical Evidence from 30 Chinese Provinces," Sustainability, MDPI, vol. 13(21), pages 1-18, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Priyanka Pradhan & Puspanjali Behera & Litu Sethi & Badri Narayan Rath & Narayan Sethi, 2025. "Can green growth and ecological footprint mitigation go hand on hand? The role of sectoral energy consumption, green innovation, and greenfield investment in emerging economies," Economic Change and Restructuring, Springer, vol. 58(2), pages 1-27, April.

    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. Biswanath Behera & Puspanjali Behera & Narayan Sethi, 2024. "Decoupling the role of renewable energy, green finance and political stability in achieving the sustainable development goal 13: Empirical insight from emerging economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 119-137, February.
    2. Amir Iqbal & Wei Zhang & Sayeda Jahangir, 2025. "Building a Sustainable Future: The Nexus Between Artificial Intelligence, Renewable Energy, Green Human Capital, Geopolitical Risk, and Carbon Emissions Through the Moderating Role of Institutional Qu," Sustainability, MDPI, vol. 17(3), pages 1-40, January.
    3. FengSheng Chien & Ching-Chi Hsu & Massoud Moslehpour & Muhammad Sadiq & Bushra Tufail & Thanh Quang Ngo, 2024. "A step toward sustainable development: the nexus of environmental sustainability, technological advancement and green finance: evidence from Indonesia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 11581-11602, May.
    4. George E. Halkos & Apostolos S. Tsirivis, 2023. "Electricity Prices in the European Union Region: The Role of Renewable Energy Sources, Key Economic Factors and Market Liberalization," Energies, MDPI, vol. 16(6), pages 1-20, March.
    5. Zhang, Lu & Wong, Wing-Keung & Liu, Lunwu & Al Shraah, Ata & Albasher, Badah & Shamansurova, Zilola, 2024. "Balancing environmental sustainability through fintech, green finance natural resource, and economic growth in Asian economies - A Cup-FM and Cup-BC study," Resources Policy, Elsevier, vol. 98(C).
    6. Neves, Sónia Almeida & Marques, António Cardoso & de Sá Lopes, Leonardo Batista, 2024. "Is environmental regulation keeping e-waste under control? Evidence from e-waste exports in the European Union," Ecological Economics, Elsevier, vol. 216(C).
    7. Miomir Jovanović & Ljiljana Kašćelan & Aleksandra Despotović & Vladimir Kašćelan, 2015. "The Impact of Agro-Economic Factors on GHG Emissions: Evidence from European Developing and Advanced Economies," Sustainability, MDPI, vol. 7(12), pages 1-21, December.
    8. Riza Radmehr & Samira Shayanmehr & Ernest Ali Baba & Ahmed Samour & Tomiwa Sunday Adebayo, 2024. "Spatial spillover effects of green technology innovation and renewable energy on ecological sustainability: New evidence and analysis," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 1743-1761, June.
    9. Obobisa, Emma Serwaa & Chen, Haibo & Mensah, Isaac Adjei, 2022. "The impact of green technological innovation and institutional quality on CO2 emissions in African countries," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    10. Du, Juntao & Shen, Zhiyang & Song, Malin & Vardanyan, Michael, 2023. "The role of green financing in facilitating renewable energy transition in China: Perspectives from energy governance, environmental regulation, and market reforms," Energy Economics, Elsevier, vol. 120(C).
    11. Zdravko Šergo & Amorino Poropat & Pavlo Ružić, 2014. "The determinants of length of stay and arrivals of tourists in the Croatia: a panel data approach," Tourism and Hospitality Industry section8-4, University of Rijeka, Faculty of Tourism and Hospitality Management.
    12. Pang, Lidong & Zhu, Meng Nan & Yu, Haiyan, 2022. "Is green finance really a blessing for green technology and carbon efficiency?," Energy Economics, Elsevier, vol. 114(C).
    13. George E. Halkos & Apostolos S. Tsirivis, 2023. "Electricity Production and Sustainable Development: The Role of Renewable Energy Sources and Specific Socioeconomic Factors," Energies, MDPI, vol. 16(2), pages 1-21, January.
    14. Biswajit Patra & Narayan Sethi, 2024. "Does digital payment induce economic growth in emerging economies? The mediating role of institutional quality, consumption expenditure, and bank credit," Information Technology for Development, Taylor & Francis Journals, vol. 30(1), pages 57-75, January.
    15. Siti Nurain Muhmad & Sadia Cheema & Akmalia Mohamad Ariff & Nik Fadhilah Nik Him & Siti Nasuha Muhmad, 2024. "Systematic literature review and bibliometric analysis of green finance and renewable energy development," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 7342-7355, December.
    16. Chao, Chi-Chur & Trinh, Cong Tam & Nguyen, Xuan, 2023. "Carbon neutrality and wage inequality in a sustainable economy: New evidence from business dynamism," Economic Modelling, Elsevier, vol. 127(C).
    17. Liu, Yang & Zhao, Xiaomeng & Dong, Kangyin & Jiang, Qingzhe, 2023. "Assessing the role of green finance in sustainable energy investments by power utilities: Evidence from China," Utilities Policy, Elsevier, vol. 84(C).
    18. Nora Abu Asab & Juan Carlos Cuestas, 2017. "The Credibility of a Soft Pegged Exchange Rate in Emerging Market Economies: Evidence from a Panel Data Study," Annals of Economics and Finance, Society for AEF, vol. 18(1), pages 29-51, May.
    19. Zhijie Hao & Ziqian Zhao & Zhiwei Pan & Decai Tang & Meiling Zhao & Hui Zhang, 2025. "Spatial Effects of Financial Agglomeration and Green Technological Innovation on Carbon Emissions," Sustainability, MDPI, vol. 17(6), pages 1-34, March.
    20. Jemima Peppel-Srebrny, 2018. "Government borrowing cost and balance sheets: do assets matter?," Economics Series Working Papers 860, University of Oxford, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    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:wly:sustdv:v:32:y:2024:i:3:p:2709-2723. 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: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    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.