The Impact Of Green Finance On Mitigating Environmental Degradation In Low To Average Income Countries Worldwide From 2003-2021

Abstract

The research topic "Analyzing the impact of green finance on mitigating environmental degradation" is conducted by the author group with the aim of determining the direction and extent of the impact of green finance, as well as other factors, on controlling the state of environmental recession in countries with average to low income levels worldwide from 2003 to 2021. Data on green finance, environmental recession, and other control variables, including (1) Technological innovation, (2) Income, (3) Urbanization, (4) Trade openness, and (5) Energy consumption activities, are collected by the group from highly reliable sources such as the World Development Indicators and Our World in Data websites. The hypotheses are tested using the quantile regression model with appropriate tests, including tests for slope homogeneity, cross-dependence, unit roots, and co-integration. The analysis results show that the green finance variable has an inverse impact on environmental recession, implying that when countries prioritize the development of green finance, the state of environmental recession will decrease and be better controlled. Additionally, the research findings also indicate that the remaining control variables in the model have a positive impact on environmental recession. Therefore, these factors can be considered as the agents causing negative effects on the natural ecosystem, leading to a serious decline in the quality of the environment. Thus, this research contributes to the knowledge base regarding the important role of green finance in environmental protection and recession mitigation. It also assists national leaders in formulating appropriate policies to enhance and develop this new financial trend, thereby addressing the common issue of environmental pollution in most countries worldwide amidst industrialization and modernization.