IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/129351.html

Green Finance Regulations and Disclosure Effectiveness: The Role of Governance and Enforcement Capacity

Author

Listed:
  • Daud, Ataullah
  • Jadoon, Atif Khan
  • Ali, Amjad
  • Audi, Marc

Abstract

Green finance frameworks such as taxonomies, mandatory disclosure requirements, external verification mechanisms, and supervisory monitoring systems continue to expand, concerns regarding regulatory effectiveness, enforcement quality, and compliance-related constraints have got significant attention among policymakers. This study examines the relationship among regulatory design frameworks, enforcement capacity, and compliance-coordination frictions in shaping post-issuance green finance disclosure outcomes in developing economies. The study adopts a mixed-method research design comprising two empirical stages. The first stage utilizes a perception-based survey of green finance market participants to evaluate the influence of regulatory structures and institutional coordination mechanisms on disclosure practices. The second stage employs a cross-jurisdictional panel dataset to examine both the direct and moderating effects of governance quality as a proxy for enforcement capacity. The empirical analysis was conducted using regression-based estimation techniques to assess the relationships among the study variables. The findings indicate that well-structured regulatory design frameworks significantly improve post-issuance green finance disclosure outcomes, while stronger governance quality and institutional enforcement capacity further enhance regulatory effectiveness. However, the interaction between regulatory design and governance quality explains that stronger institutional environments may partially substitute for extensive regulatory complexity rather than merely reinforcing it. In addition, compliance and coordination frictions negatively affect disclosure quality and implementation efficiency across green finance systems. The results emphasize the importance of balanced regulatory structures, institutional effectiveness, and coordinated implementation mechanisms in strengthening green finance disclosure practices within developing economies.

Suggested Citation

  • Daud, Ataullah & Jadoon, Atif Khan & Ali, Amjad & Audi, Marc, 2026. "Green Finance Regulations and Disclosure Effectiveness: The Role of Governance and Enforcement Capacity," MPRA Paper 129351, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:129351
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/129351/1/MPRA_paper_129351.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Qingxian Jia, 2023. "The impact of green finance on the level of decarbonization of the economies: An analysis of the United States', China's, and Russia's current agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 110-119, January.
    2. Tahir, Sumiya & Audi, Marc & Ali, Amjad, 2026. "Growth Dynamics of Green and Brown Foreign Direct Investment in Central and Eastern Europe: Evidence from ARDL and NARDL Models," MPRA Paper 128997, University Library of Munich, Germany.
    3. Cojoianu, T.F. & French, D. & Hoepner, A.G.F. & Sheenan, L. & Vu, A., 2025. "On the origin of green finance policies," Journal of Financial Stability, Elsevier, vol. 79(C).
    4. Md. Bokhtiar Hasan & Md. Mamunur Rashid & Tapan Sarker & Muhammad Shafiullah, 2024. "Exploring the determinants of green bond market development in Bangladesh," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 213-233, March.
    5. Naeem, Huzefa & Ali, Amjad & Audi, Marc, 2025. "The Impact of Financial Stability on Environmental Degradation: Mediating Role of Green Investment and Moderating Role of Environmental Awareness," MPRA Paper 127490, University Library of Munich, Germany.
    6. Douglas A. Adu, 2022. "Sustainable banking initiatives, environmental disclosure and financial performance: The moderating impact of corporate governance mechanisms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2365-2399, July.
    7. Marc Audi & Amjad Ali & Marc Poulin, 2026. "Modelling Urban Expansion, Energy Consumption, and Environmental Sustainability: The Moderating Role of Environmental Taxes in Developing Countries," Sustainability, MDPI, vol. 18(9), pages 1-24, May.
    8. 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.
    9. Nevatia, Vedanshi, 2026. "Sovereign green bonds: Risk-mitigating sustainability instruments in emerging markets," Energy Economics, Elsevier, vol. 155(C).
    10. repec:rfh:bbejor:v:14:y:2025:i:2:p:42-54 is not listed on IDEAS
    11. Adela Socol & Oana-Raluca Ivan & Adina Elena Danuletiu & Ionela Cornelia Cioca & Claudia Florina Botar & Dorina Elena Virdea, 2025. "The Moderating Role of Governmental Artificial Intelligence in Shaping Green Growth Dynamics in the European Union," Sustainability, MDPI, vol. 17(22), pages 1-34, November.
    12. Arshi, Afifa & Ali, Amjad & Audi, Marc, 2025. "Evaluating the Impact of Sustainability Reporting on Financial Performance: The Mediating Role of ESG Performance and the Moderating Role of Firm Size," MPRA Paper 127480, University Library of Munich, Germany.
    13. Richard Arhinful & Leviticus Mensah & Halkawt Ismail Mohammed Amin & Hayford Asare Obeng & Bright Akwasi Gyamfi, 2025. "The Strategic Role of Sustainable Finance in Corporate Reputation: A Signaling Theory Perspective," Sustainability, MDPI, vol. 17(11), pages 1-28, May.
    14. Mazin Alahmadi, 2024. "Optimizing Data Quality for Sustainable Development: An Integration of Green Finance with Financial Market Regulations," Sustainability, MDPI, vol. 16(23), pages 1-17, November.
    15. Indra Abeysekera & Feng Li & Yingjun Lu, 2021. "Financial disclosure quality and sustainability disclosure quality. A case in China," PLOS ONE, Public Library of Science, vol. 16(5), pages 1-20, May.
    16. Torsten Ehlers & Diwen (Nicole) Gao & Frank Packer, 2021. "A taxonomy of sustainable finance taxonomies," BIS Papers, Bank for International Settlements, number 118.
    17. Gillani, Syed Irfan Haider & Ali, Amjad & Audi, Marc, 2026. "Examining the Impact of Environmental Taxation, Economic Growth, and Political Instability on Sustainability," MPRA Paper 128671, University Library of Munich, Germany.
    18. Gong Cheng & Torsten Ehlers & Frank Packer & Yanzhe Xiao, 2024. "Sovereign Green Bonds: A Catalyst for Sustainable Debt Market Development?," IMF Working Papers 2024/120, International Monetary Fund.
    19. Endri Endri & Irwan Mangara Harahap & Anton Hindardjo, 2025. "The Determinants of Green Bond Issuance in Indonesia: An Analysis of Sustainable Financial Instruments," JRFM, MDPI, vol. 18(12), pages 1-24, November.
    20. Fatima, Mishal & Audi, Marc & Ali, Amjad, 2026. "Nexus Among Financial Risks and Financial Performance: A Moderating Role of Corporate Governance," MPRA Paper 128921, University Library of Munich, Germany.
    21. Ali, Amjad & Usman, Muhammad & Ahmad, Khalil, 2025. "Environmental Risks and Sovereign Credit Ratings: Evidence from Developed and Developing Economies," MPRA Paper 127543, University Library of Munich, Germany.
    22. Kraakman, Reinier & Armour, John & Davies, Paul & Enriques, Luca & Hansmann, Henry & Hertig, Gerard & Hopt, Klaus & Kanda, Hideki & Pargendler, Mariana & Ringe, Wolf-Georg & Rock, Edward, 2017. "The Anatomy of Corporate Law: A Comparative and Functional Approach," OUP Catalogue, Oxford University Press, edition 3, number 9780198724315.
    23. Bufan Zhang & Yifeng Wang, 2021. "The Effect of Green Finance on Energy Sustainable Development: A Case Study in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(12), pages 3435-3454, September.
    24. Mehdi, Hasan & Ali, Amjad & Audi, Marc, 2025. "Tourism, Sustainability, and Growth: An Empirical Investigation of Long-Run Economic Impacts in Pakistan," MPRA Paper 127310, University Library of Munich, Germany.
    25. Xiao Yan Zhou & Ben Caldecott & Andreas G. F. Hoepner & Yao Wang, 2022. "Bank green lending and credit risk: an empirical analysis of China's Green Credit Policy," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1623-1640, May.
    26. Franks, Julian R. & Schaefer, Stephen M. & Staunton, Michael D., 1997. "The direct and compliance costs of financial regulation," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1547-1572, December.
    27. Abbasi, Umar & Ali, Amjad & Audi, Marc, 2025. "Advancing ESG Integration in Stock Market: A Sectoral Study of Sustainability Reporting in Pakistan," MPRA Paper 127311, University Library of Munich, Germany.
    28. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(2), pages 525-622, May.
    29. Jakub Demski & Yingwei Dong & Patrick McGuire & Benoit Mojon, 2025. "Growth of the green bond market and green house gas emissions," BIS Quarterly Review, Bank for International Settlements, March.
    30. Charles Ndalu Wasike, 2017. "Financial regulation as moderating, influence of corporate governance, institutional quality, human capital and firm size on financial institutions performance in Kenya," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 3(6), pages 292-304.
    31. Richard A. Johnson & Karen Schnatterly & Scott G. Johnson & Shih‐Chi Chiu, 2010. "Institutional Investors and Institutional Environment: A Comparative Analysis and Review," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1590-1613, December.
    32. repec:bla:jomstd:v:47:y:2010:i:s2:p:1590-1613 is not listed on IDEAS
    33. Li, Jiaqi & Kim, Ja Ryong & Adegbite, Emmanuel, 2026. "The impact of green credit guidelines on green lending and environmental outcomes: Evidence from Chinese banks," Ecological Economics, Elsevier, vol. 242(C).
    34. Sebastian Steuer & Tobias H Tröger, 2022. "The Role of Disclosure in Green Finance," Journal of Financial Regulation, Oxford University Press, vol. 8(1), pages 1-50.
    35. Choudhary, Shamsher & Ali, Amjad & Audi, Marc, 2026. "The Relations between Internal Controls, Corporate Governance, and the Credibility of Post-Issuance Disclosures of Green Finance: Evidence using Issuer-Level Panel Data," MPRA Paper 128864, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    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. Choudhary, Shamsher & Ali, Amjad & Audi, Marc, 2026. "The Relations between Internal Controls, Corporate Governance, and the Credibility of Post-Issuance Disclosures of Green Finance: Evidence using Issuer-Level Panel Data," MPRA Paper 128864, University Library of Munich, Germany.
    2. Majeed, Rafaqat & Audi, Marc & Ali, Amjad, 2026. "Environmental, Social, and Governance Reporting and Financial Reporting Quality in Emerging Markets," MPRA Paper 129347, University Library of Munich, Germany.
    3. Javed, Harris & Audi, Marc & Ali, Amjad, 2026. "Corporate Governance and Sustainability Disclosure: An Empirical Analysis of Environmental Reporting Practices," MPRA Paper 129204, University Library of Munich, Germany.
    4. Florackis, Chris & Muktadir-Al-Mukit, Dewan & Sainani, Sushil & Zhang, Ziyang (John), 2025. "Stock market reaction to mandatory carbon disclosure announcements: The role of institutional investors," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).
    5. Ge, Yongbo & Zhu, Yuexiao, 2022. "Boosting green recovery: Green credit policy in heavily polluted industries and stock price crash risk," Resources Policy, Elsevier, vol. 79(C).
    6. Abdelnaser M. Mohamed Amer & Asil Azimli & Muri Wole Adedokun, 2025. "Earnings Management and IFRS Adoption Influence on Corporate Sustainability Performance: The Moderating Roles of Institutional Ownership and Board Independence," Sustainability, MDPI, vol. 17(17), pages 1-27, September.
    7. Zahid, Haider & Audi, Marc & Ali, Amjad, 2026. "The Role of Cryptocurrency Regulations in Determining Financial Reporting Quality: An Empirical Analysis," MPRA Paper 129042, University Library of Munich, Germany.
    8. Marc Audi & Amjad Ali & Marc Poulin, 2026. "Modelling Urban Expansion, Energy Consumption, and Environmental Sustainability: The Moderating Role of Environmental Taxes in Developing Countries," Sustainability, MDPI, vol. 18(9), pages 1-24, May.
    9. Aneta Napieralska & Przemys{l}aw Kk{e}pczy'nski, 2024. "Redefining Accountability: Navigating Legal Challenges of Participant Liability in Decentralized Autonomous Organizations," Papers 2408.04717, arXiv.org.
    10. Chris Kenyon & Mourad Berrahoui & Andrea Macrina, 2021. "Sustainability Manifesto for Financial Products: Carbon Equivalence Principle," Papers 2112.04181, arXiv.org.
    11. Alexandre Madelaine, 2024. "Negative Externalities of Regulation: Identity‐relevant Information in Mandatory Short‐selling Disclosures," Abacus, Accounting Foundation, University of Sydney, vol. 60(4), pages 892-934, December.
    12. Qadri, Hussain Mohi ud Din & Ali, Hassnian & Abideen, Zain ul & Jafar, Ahmad, 2024. "Mapping the Evolution of Green Finance Research and Development in Emerging Green Economies," Resources Policy, Elsevier, vol. 91(C).
    13. Guo, Shu & Zhang, ZhongXiang, 2023. "Green credit policy and total factor productivity: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 128(C).
    14. Al-Najjar, Basil & Salama, Aly, 2022. "Mind the gap: Are female directors and executives more sensitive to the environment in high-tech us firms?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    15. Ronelle Burger & Canh Thien Dang & Trudy Owens, 2017. "Better performing NGOs do report more accurately: Evidence from investigating Ugandan NGO financial accounts," Discussion Papers 2017-10, University of Nottingham, CREDIT.
    16. Geert Braam & Florian Habermann & Sam Drissen, 2025. "CSR Decoupling and Assurance of CSR Reports: Do Combinations of Level, Scope, and Assurance Provider Matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(6), pages 8065-8081, November.
    17. Sebastian Kaumanns, 2019. "“Some fuzzy math”: relational information on debt value adjustments by managers and the financial press," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 755-794, December.
    18. Oleh Pasko & Mykola Hordiyenko & Fuli Chen & Yarmila Tkal & Yulia Abraham, 2021. "Mapping Global Research on International Financial Reporting Standards: A Scientometric Review," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 116-134, May.
    19. Bei Liu & Jinmin Wang & Xinle Tong & Zhihua Zhou & Zhaoxuan Qiu, 2024. "Institutional investor shareholding and the quality of corporate innovation: Moderating effects based on internal and external environment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(1), pages 326-338, January.
    20. Suman Banerjee & Saul Estrin & Sarmistha Pal, 2022. "Corporate disclosure, compliance and consequences: evidence from Russia," The European Journal of Finance, Taylor & Francis Journals, vol. 28(17), pages 1770-1802, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:129351. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.