Holistic Model of Green Economic Growth for Sustainable Development in Selected OIC Countries: The Moderating Role of Institutional Quality

The global agenda toward sustainable development encourages Islamic countries to balance economic growth with environmental preservation. This study aims to analyze the impact of Islamic finance, renewable energy, technological innovation, and environmental policies on green economic growth in selected member countries of the Organization of Islamic Cooperation (OIC), both in the short and long term, while considering the moderating role of institutional quality. The study employs panel data from the 2019–2023 period and utilizes the Generalized Method of Moments (GMM) to address potential endogeneity and bias in the dynamic model. Control variables include inflation, foreign direct investment (FDI), gross domestic product (GDP), and population to ensure more robust results. Empirical findings indicate that Islamic finance, renewable energy, and technological innovation have a positive and significant effect on green economic growth, while the impact of environmental policies depends on the level of institutional quality. Furthermore, institutional quality is found to have a positive moderating effect, strengthening the relationship between Islamic finance and green economic growth. These findings underscore the importance of strong institutions in enhancing the effectiveness of financial and green technology policies. This study contributes to the development of the sustainable Islamic finance literature by offering policy implications for OIC countries to strengthen institutional frameworks, promote renewable energy innovation, and integrate financial instruments in achieving sustainable development goals.