Can environmental technologies and banking development generate green growth? Empirical evidence from 22 most polluted economies
DOI:
https://doi.org/10.1108/REGE-01-2025-0008Keywords:
Climate change, Banking sector development, Environmental technology, Green growth, 22 countries, PMG-ARDL modelAbstract
PurposeThe primary objective of this study is to analyze the influence of environmental technology and banking sector development on green growth. Pursuing green and sustainable growth is imperative for combating climate change. Green growth is encouraged in the most polluting economies.
Design/methodology/approachThis study focuses on 22 of the world’s most polluting economies during the period 2004–2023. In this context, the Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) was employed for empirical evaluation.
FindingsIn the long term, technological innovation, particularly environmental patents and international trade play a central role in fostering ecological transition. However, financial resources such as bank deposits and stock market capitalization act as potential barriers when not directed towards sustainable projects. In the short term, complex dynamics emerge, highlighting the importance of the variables’ lagged effects.
Research limitations/implicationsAlthough much research has been conducted on the individual determinants of green growth, few studies have examined the combined impact of environmental technologies and bank financing on this phenomenon. This highlights the need for joint analyses that consider environmental technological progress and banking financing mechanisms. Such an analysis would help us better understand their role in promoting sustainable and inclusive green growth.
Practical implicationsThe onus is for the public decision-maker to establish a more advanced development policy that considers environmental sustainability.
Originality/valueThe present study demonstrates the correlation between the adoption of environmental technologies and financial systems on the one hand, and the promotion of green growth on the other. It has the capacity to facilitate collaboration between the fields of environment and economy, thereby contributing to the sustainable development goals (SDGs), especially SDG 8 (Decent Work and Economic Growth) and SDG 13 (Climate Action).
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