Green investment, financial development, and environmental quality: International evidence from developing countries

Abstract

This study examines the effects of green investment and financial development on environmental quality of 58 developing countries from 2005 to 2020. Environmental quality is measured by carbon dioxide (CO2) emissions, calculated as metric tons per capita; green investment is calculated as total nuclear, renewables, and other production (quad Btu); financial development is calculated as financial development index. Furthermore, the study also evaluates other factors that influence environmental quality. By using the GMM estimator, the research found that while green investment exerts a positive impact on environmental quality, financial development negatively impacts environmental quality. Moreover, it discovered that economic growth and trade openness also have a negative effect on environmental quality. These findings are expected to make an outstanding contribution to reducing CO2 emissions and improving environmental quality in Vietnam, as well as many other countries.