Tu ail, Muhammad; Song, Lin; Khan, Zeeshan
A icle
G een inance and g een g ow h nexus: E alua ing he
ole o globaliza ion and human capi al
Jou nal o Applied Economics
P o ided in Coope a ion wi h:
Uni e si y o CEMA, Buenos Ai es
Sugges ed Ci a ion: Tu ail, Muhammad; Song, Lin; Khan, Zeeshan (2024) : G een inance and g een
g ow h nexus: E alua ing he ole o globaliza ion and human capi al, Jou nal o Applied Economics,
ISSN 1667-6726, Taylo & F ancis, Abingdon, Vol. 27, Iss. 1, pp. 1-27,
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G een finance and g een g ow h nexus: e alua ing he
ole o globaliza ion and human capi al
Muhammad Tu ail, Lin Song & Zeeshan Khan
To ci e his a icle: Muhammad Tu ail, Lin Song & Zeeshan Khan (2024) G een finance and
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RESEARCH ARTICLE
G een inance and g een g ow h nexus: e alua ing he ole o
globaliza ion and human capi al
Muhammad Tu ail
a
, Lin Song
a
and Zeeshan Khan
b
a
School o Economics and Finance, Xi’an Jiao ong Uni e si y, Xian, China;
b
Facul y o Business, Cu in
Uni e si y Malaysia, Mi i, Malaysia
ABSTRACT
G een inance is one o he eme ging esea ch a eas, pa icula ly in
academia and indus ies. Howe e , i s con ibu ion o g een g ow h
emains ela i ely unexplo ed. Unlike p e ious s udies, he cu en
esea ch con ibu es o he exis ing li e a u e by using g een
inance as a policy ool o achie ing g een g ow h. The me hod
o momen quan ile eg ession is used o in es iga e he link
be ween g een inance and o he con ol a iables on g een
g ow h in he 19 selec ed OECD economies om 1990 and 2021.
The main indings o he s udy suppo he idea ha g een inance
accele a es g een g ow h in he selec ed coun ies. Simila ly, he
esul s o human capi al show a signi ican ly posi i e ela ionship
wi h g een g ow h. Addi ionally, inc ease in globaliza ion and GDP
dec ease g een g ow h. To p omo e g een g ow h and achie e he
sus ainable en i onmen al goals se by OECD economies, policy-
make s and egula o s mus p io i ize g een inance.
ARTICLE HISTORY
Recei ed 12 Sep embe 2023
Accep ed 10 Janua y 2024
KEYWORDS
G een inance; g een g ow h;
OECD economies; MMQR
app oach
1. In oduc ion
Many inancial ac i i ies a ound he globe expe ienced a slowdown and in some cases
p oduc ion e en came o a hal due o he COVID-19 pandemic ha began a he end o
2019 (Xu e al., 2023). Schola s and en i onmen alis s wo ldwide (Feng e al., 2022;
Z. Khan e al., 2023; We ikhe, 2022; Xu e al., 2023) a gue ha as i ms and en u es
esume hei inancial ope a ions, hey should p io i ize en i onmen al conce ns. This
concep is o en e e ed o as he g een eco e y o he global economy and he e is an
u gen need o na ions o wo k owa ds achie ing hei sus ainable de elopmen goals
(Xu e al., 2023; Yu e al., 2023). Fu he mo e, he g een economic eco e y can lead o an
en i onmen ally iendly socie y, inno a ions, wo ldwide in eg a ion, c ea e employ-
men , a ca bon-neu al economy, and a educ ion in se e e en i onmen al issues.
Con e sely pushing economies o emb ace he idea o g een economic eco e y will
undoub edly p omo e he ansi ion o clean ene gy and educe he wo ld’s dependence
on ossil ules. Conside ing non- enewable ene gy sou ces p ima ily pe oleum as he
oo cause o economic c ises such as oil shocks, poli ical ensions, and e en a med
CONTACT Muhammad Tu ail [email p o ec ed]; [email p o ec ed] School o
Economics and Finance, Xi’an Jiao ong Uni e si y, Xian, China
JOURNAL OF APPLIED ECONOMICS
2024, VOL. 27, NO. 1, 2309437
h ps://doi.o g/10.1080/15140326.2024.2309437
© 2024 The Au ho (s). Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup.
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion-NonComme cial License (h p://
c ea i ecommons.o g/licenses/by-nc/4.0/), which pe mi s un es ic ed non-comme cial use, dis ibu ion, and ep oduc ion in any medium,
p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been published allow he pos ing o he Accep ed
Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
con lic among na ions (Johns one & McLeish, 2020; G. Li e al., 2020; Xu e al., 2023)
a g een economic eco e y ha educes eliance on ossils uels can lead o a posi i e
ou comes such as peace and s abili y.
Al hough all he bene i s o g een economic es o a ion, he mos di icul challenge is
he absence o su icien capi al o sus ain g een asks. Financie s in he economic sec o
a e eluc an o sus ain g een p ojec s gi en ha hey equen ly ha e la e e u ns and
also pay low p o i s in he u u e. The lack o unding o a ied g een p ojec de elop-
men is e iewed as a c i ical conce n since ede al go e nmen s, pa icula ly in de el-
oping na ions, need mo e cash o p og ess all en i onmen - iendly e o s and a ious
o he inancial p ojec s. This issue became mo e se ious du ing he COVID-19 pan-
demic. The go e nmen ’s concen a ion became mo e se ious on sa ing he li es o he
people, and he e was li le impo ance gi en o such p ojec s (Ma awa daya e al., 2022).
As a esul , de eloped and de eloping economies mus ind a sui able solu ion o
coun e ac hese laws. One o he mos iable and in en i e app oaches o add ess his
se ious p oblem is o use g een inance sys ema ically and economically. G een inancing
is expec ed o e ec i ely s imula e exogenous g een g ow h h ough inc eased in es -
men in g een ini ia i es. Fu he mo e implemen ing en i onmen ally sus ainable ini ia-
i es will enhance o e all wel a e, es ablish eco-conscious economic s uc u es, mi iga e
mo ali y a e caused by ai pollu ion, and gene a e employmen oppo uni ies. The
de elopmen o enewable esou ces enables he e i al o he economy, leading o
sus ainable g ow h and eco- iendly economic ad ancemen . Huang e al., (2022)
belie ed ha g een inance can acili a e he ad ancemen o g een echnologies in
ad anced na ions. The objec i e o g een de elopmen is o mode nize coun ies, educe
hei ene gy consump ion, and p omo e he use o inno a i e g een echnologies.
Simila ly, Zhang e al. (2022) asse ed ha he implemen a ion o en i onmen ally
iendly ini ia i es can boos he e ec i eness o g een inance as a d i e o sus ainable
de elopmen in impo e ished coun ies.
I is c i ically impo an o in es iga e he ela ionship be ween g een inance and
g een g ow h, pa icula ly in he pos -COVID-19 pandemic, when economies a e
a emp ing o e i e economic de elopmen based on en i onmen al ac o s. Fo his
pu pose, nume ous s udies ook place and hey ha e examined di e en indica o s o
g een g ow h and en i onmen al issues. These indica o s such as indus ializa ion
(Mealy & Tey elboym, 2022), enewable ene gy consump ion (T. Jiang e al., 2022;
Sa wa , 2022), inancial de elopmen (Xuan e al., 2023), globaliza ion (Chen e al.,
2023), iscal decen aliza ion (Tu ail e al., 2021), ag icul u e (Y. Lin & Li, 2023) and
ou ism (Shang e al., 2023). Howe e , he exis ing body o p e ious s udies has igno ed
he ela ionship be ween g een inance and g een g ow h, pa icula ly in OECD econo-
mies. Fu he mo e, o addi ionally explain he g een inance in selec ed OECD coun ies
Figu e 1 p esen s he a ia ion in di e se en i onmen ally ela ed go e nmen R&D
budge s in hese economies. We calcula ed he a e ages o each yea o all 19 selec ed
economies and p esen ed he esul in Figu e 1.
The g aph illus a es he consis en g adual inc ease in g een inance ac oss OECD
economies. Howe e , Figu e 1 addi ionally shows ha g een inance dec eased du ing
he global economic c isis o (2007–08) which wen h ough a la ge ad e se adjus men
in 2010, which is an indica ion o he Eu opean inancial obliga ion si ua ion. A e 2008
hese economies g adually mo ed owa ds a be e g een inance sys em. Un o una ely,
2M. TUFAIL ET AL.
again a he end o 2019 when he pandemic s a ed, hese economies dec eased hei
inances, pa icula ly o en i onmen ally iendly p ojec s. The decline in g een inance
in OECD economies du ing he speci ied yea s may be a ibu ed o changes in go e n-
men adminis a ions, he global inancial c isis, and he COVID-19 pandemic. Howe e ,
se e al ba ie s o g een inance exis , including a lack o comp ehension among inan-
cie s. Mo eo e , in es o s o en ace challenges in decision-making due o insu icien
in o ma ion and s ingen quali y equi emen s. As g een inance aligns wi h con en-
ional inance and con ibu es o he economic g ow h o coun ies, he concep is s ill
eme ging and he e emains an u gen need o in-dep h esea ch.
Based on he abo e discussion i is impo an o s udy whe he he ongoing de elop-
men o g een inance in he selec ed OECD economies can con ibu e o he ad ance-
men o g een g ow h. This is pa icula ly aluable o analyzing and assessing he
ongoing de elopmen o g een inance in OECD economies. Mo eo e , i is e iden
om he p eceding discussion ha addi ional s udies a e necessa y o es ablish he link
be ween g een inance and g een g ow h. The e o e, ou cu en esea ch aims o add ess
his gap by examining he e ec o g een inance on g een g ow h in he selec ed
Figu e 1. G een inance in OECD economies 1990–2021. Sou ce: Au ho s isualiza ion based on 19
(OECD) economies panel da a om OECD s a is ics.
JOURNAL OF APPLIED ECONOMICS 3
economies. Addi ionally, we ha e inco po a ed essen ial con ol a iables such as human
capi al, globaliza ion, and economic de elopmen o conduc a mo e comp ehensi e
analysis o hei in luence on g een g ow h. The selec ion o hese a iables is based on
he high li e acy a es, well-globalized ma ke , and pu sui o high economic g ow h in
OECD economies. We employed he MMQR eg ession me hod because i p o ides
a lexible and obus amewo k o modeling he condi ional dis ibu ion o he depen-
den a iable, accoun ing o he e ogenei y, ou lie s, and nonlinea ela ionships. This
esea ch assesses he cu en s a e o g een de elopmen in OECD economies and
explo es i s po en ial impac on u u e g een g ow h. The indings o his esea ch ha e
he po en ial o aid policymake s and en i onmen alis s in ecognizing g een inance as
a pi o al indica o o os e ing g een g ow h and con ibu ing o he p o ec ion o he
ecosys em o bo h p esen and u u e gene a ions. We selec ed he OECD economies o
his s udy because hese economies collec i ely ep esen a subs an ial sha e o he global
economy. The OECD membe s a es include some o he wo ld’s ad anced economies
such as he USA, Aus alia, Denma k, and o he s. These na ions play a signi ican ole in
globaliza ion, in e na ional ade, and in es men . Fu he mo e, hey possess obus
ins i u ional amewo ks and egula o y en i onmen s ha can acili a e he
Figu e 2. Me hodological Design. Sou ce: Au ho s Visualiza ion
4M. TUFAIL ET AL.
implemen a ion o g een inance ini ia i es including well-es ablished inancial sys ems,
e ec i e go e nance s uc u es, and a ma u e legal amewo k. The e o e, s udying he
expe iences and knowledge o hese economies is essen ial o a comp ehensi e unde -
s anding o he subjec ma e .
Based on he a icle’s aims and con ibu ion o p e ious li e a u e he s udy s uc u e
can be designed in he ollowing way. Sec ion 2 deeply elabo a es on he ecen li e a u e
e iew ele an o he s udy and o mula es he li e a u e gap. Sec ion 3 discusses he
heo e ical mechanism and me hodology o he s udy. The sec ion 4 discusses he esul s
as well as discussions. Sec ion 5 elabo a es conclusion and app op ia e policy
ecommenda ions.
2. Li e a u e e iew
2.1. G een inance and g een g ow h
Al hough he e is no globally app o ed de ini ion o g een inance as a b and-new
inancial model he li e a u e o e s h ee basic summa ies. The i s is en i onmen al
inance, which p o ides inancial solu ions o add ess p ac ical issues such as en i on-
men al managemen , pollu ion moni o ing, esou ce p ese a ion, and o he eco-
iendly ini ia i es (La i e al., 2022). Acco ding o he 2nd pe spec i e, inancial de el-
opmen employs a ious inancial echniques and p oduc s o mi iga e en i onmen al
isks (Bha acha yya, 2022). The hi d and mos ecen pe spec i e posi s ha g een
inance cons i u es a inancial amewo k ha p omo es en i onmen ally iendly in es -
men s and con ibu es o he de elopmen o an en i onmen ally conscious socie y wi h
a ocus on ca bon inance (Zhao e al., 2023). Gene ally, p io esea ch in he ield o
Figu e 3. Visualiza ion o MMQR esul s. Sou ce: Au ho s Visualiza ion based on MMQREG echnique
applied in STATA.
JOURNAL OF APPLIED ECONOMICS 5
g een inance can be ca ego ized in o wo dis inc s udy g oups. The i s g oup con-
cen a ed on he e iciency aspec o g een inance solu ions examining how his s a egy
could be implemen ed using sus ainable g ow h s a egies in a ious coun ies bo h
heo e ically and expe imen ally. Con e sely, se e al s udies ha e demons a ed he
ine ec i eness o inancial s a egies due o a ious easons including he lack o ans-
pa ency in policymaking and go e nmen in e en ion.
In he i s g oup o s udies, a ious indings highligh ed he e ec i eness o g een
inance ools in ad ancing g een g ow h and ene gy ans o ma ion goals. Fo ins ance,
M. A. Khan e al. (2022) s udied Asian economies and ound ha g een inance helps
educe ca bon oo p in . Simila ly, Peng & Xiong (2022) conduc ed esea ch in China
and concluded ha i p omo ed Chinese g een p ojec s. Fu he mo e, Al Mamun e al.
(2022) examined he global impac o g een inance showing signi ican posi i e e ec s
wo ldwide. The second g oup ocused on he ela ionship be ween g een inance ools
and o he inancial sec o indica o s. Fo ins ance, R. Wang e al. (2022) in es iga ed he
e ec i eness o g een inance ad e isemen s on g een g ow h bu ound limi ed impac
on de elopmen a ge s. M. Liu (2022) disco e ed he ine iciency o he g een bond
ma ke due o i s poo esilience o ola ili y. Adekoya e al. (2021) ound a simila
ine iciency in he U.S. g een bond ma ke due o high ola ili y. In he case o
Hong Kong, Ng (2018) concluded ha p ac ical plans and ma ke -based app oaches
a e necessa y o he g een inance sys em o be mo e e ec i e. Simila ly, in he case o
Colombia, Ruiz e al. (2016) ad oca ed o go e nmen in e en ion o s imula e p i a e
in ol emen in he g een inancing sys em.
The second g oup o s udies in es iga ed he complex ela ionship be ween g een
inance ools and a ious key ac o s. The li e a u e in his domain p obed he in e sec-
ions o g een inance wi h esou ce e iciency and i s impac on g een g ow h as
exempli ied by he wo k o Sun e al. (2022). Desalegn & Tangl (2022) conduc ed
a comp ehensi e e iew o p io s udies culmina ing in he disce nmen ha g een
inance indeed exe s a posi i e in luence on o e all g een economic g ow h. Huang
e al. (2022) con ended ha subs an ial g een g ow h can be ealized h ough he
judicious applica ion o g een inance d i en by he ca aly ic spillo e e ec o g een
echnology. This a gumen ecei ed empi ical alida ion in he esea ch conduc ed by
Mngumi e al. (2022), who me iculously analyzed spanning he BRICS economies om
2005 o 2019 using a panel quan ile eg ession me hodology. Fu he mo e, H. Zhou & Xu
(2022) illus a ed he ou comes de i ed om he ad ancemen o in ech echnology wi h
his p og ess mode a ed by g een inance, ul ima ely leading o a disce nible upsu ge in
g een economic g ow h. X. Wang & Wang (2021) unde sco ed he pi o al ole played by
g een inance in he e i aliza ion o he comme cial amewo k he eby con ibu ing
posi i ely o g een g ow h (X. Zhou e al., 2020). in hei s udy ocused on a ious
p o inces in China unea hed ha g een inance se es as a po en d i e no only o
economic expansion bu also o en i onmen al enhancemen .
2.2. Globaliza ion and g een g ow h
Social Scien is s and policymake s ha e engaged in obus deba es conce ning he impac
o globaliza ion on economic g ow h. Some a gue ha globaliza ion os e s sus ainable
de elopmen (Jahange , Chish i, e al., 2022; Ze aibi e al., 2023). Ulucak e al. (2020)
6M. TUFAIL ET AL.
iden i ied h ee channels h ough which globaliza ion a ec s eco- iendly de elopmen .
The “scale impac ” posi s ha economic globaliza ion may aise non enewable uel
consump ion, po en ially ha ming en i onmen al quali y. The “ echnological e ec ” e ec
con ends ha i can p omo e mo e e icien and en i onmen ally iendly g een de elop-
men . The s uc u e e ec sugges ed a nuanced link wi h bo h posi i e and nega i e
implica ions o eco- iendly g ow h (Chen e al., 2023). The impac o inancial globaliza-
ion a ies ac oss s udies. C. Jiang & Chang (2022) ound a posi i e in luence on he eco-
iendly de elopmen o he hos economy while Song e al. (2015) indica ed po en ial
e iciency educ ion in hea ily pollu ing indus ies. X. L. Wang e al. (2021) highligh ed
nega i e spillo e e ec s on eco- iendly p oduc i i y in he indus ial sec o . Howe e ,
W. Li e al. (2019) a gued ha inancial globaliza ion leads o echnological ad ancemen
ha expedi es eco- iendly ans o ma ion in he hos economies’ indus ial sec o s p o-
mo ing eco- iendly de elopmen . B. Lin & Zhu (2019) obse ed a posi i e e ec in
Taiwan, Macao, and Hong Kong while Chen e al. (2023) sugges ed a bene icial impac
on domes ic consume s u he s imula ing eco- iendly g ow h. These indings unde -
sco e he ongoing deba e su oundings he in luence o economic globaliza ion on g een
g ow h
2.3. Human capi al and g een g ow h
The endogenous g ow h heo y unde sco es he pi o al ole o human capi al in he
p oduc ion p ocess and economic g ow h (Jahange , Hossain, e al., 2023; Za a e al.,
2019). Human capi al is in ica ely connec ed wi h he na u al sys em and exe s
a subs an ial in luence on en i onmen al issues. Fo ins ance, i acili a es he adap a ion
o he economic sys em, spu s indus ial g ow h, enhances public awa eness o en i on-
men al conce ns, and encou ages he de elopmen o g een echnologies h ough
esea ch and de elopmen in es men (Ganda, 2022). Recen esea ch subs an ia ed he
posi i e impac o human capi al on ca bon emissions educ ion in BRICS economies o
he pe iod o 1990 o 2017 (Ganda, 2022). This unde sco ed he impo ance o ongoing
en i onmen al educa ion o p omo e comp ehension o ze o emissions policies and
os e sus ainable en i onmen al p ospe i y. Fu he esea ch e ealed ha Sou h Asia
displays a highe p opensi y o emb ace g een echnologies and p omo e he sus ainable
use o na u al esou ces when equipped wi h ad anced knowledge and educa ion
(Sa kodie e al., 2020). Simila indings a e e iden in he con ex o La in Ame ica and
he Ca ibbean (Na haniel e al., 2021) whe e he de elopmen o human capi al and
inc eased en i onmen al awa eness and conduci e o sus ainable economic g ow h.
A s udy conduc ed in Pakis an be ween 1971 and 2014 demons a ed ha a highe
le el o human de elopmen led o a educ ion in ca bon emissions wi hou impeding
economic expansion (Bano e al., 2018). In he case o he Uni ed S a es, Za a e al.
(2019) used he ARDL model and ound ha human capi al has a posi i e impac on
en i onmen al quali y and e icien u iliza ion o na u al esou ces.
2.4. Economic g ow h and g een g ow h
The a ailable li e a u e has no di ec ly explo ed he speci ic ela ionship be ween
economic g ow h and g een g ow h hough a limi ed body o li e a u e has explo ed
JOURNAL OF APPLIED ECONOMICS 7
yi ¼aiþXK
k¼1γkð Þ
iyi: kþXK
k¼1βkð Þ
ixi; kþεi (12)
In he abo e equa ion aiandβi he slope coe icien s and indi idual in e cep , while he
symbol “i” and ep esen s c oss-sec ion and ime pe iod espec i ely. Mo eo e γkð Þ
i and
βkð Þ
i a e he au o eg essi e pa ame e s and he eg ession coe icien es ima es espec-
i ely. In he empo al dimension, he pa ame e s ai and βi a e cons an , bu he
pa ame e s γkð Þ
i and βkð Þ
i a e expec ed o a y be ween na ions. The (Dumi escu &
Hu lin, 2012) panel causali y app oach con as s a causal ela ionship as he al e na i e
o he null hypo hesis o no causal ela ionship. Following a e he a e age es s a is ic
and s anda dized es s a is ic o he (Dumi escu & Hu lin, 2012) es :
WHNC
N;T¼N1XN
i¼1Wi;T(13)
ZHNC
N;T¼ i i i i i
N
2M
qWHNC
N;TM
� �!N0;1ð Þ (14)
The Wi;T shows he indi idual Wald s a is ics, while he WHNC
N;T and ZHNC
N;T ep esen s he
a e age and s anda dized es s a is ics. The me hodological s c u e o he cu en s udy
is ou lined in Figu e 2 espec i ely.
4. Resul s and discussion
This sec ion p esen s he empi ical indings o he s udy and discusses he assessmen
ou lines in sec ion 3. Table 2 p o ides he desc ip i e s a is ics o he a ge ed a iables.
The s a is ics e eal a ia ions in he ange alues o he a iables indica ing an i egula
moni o ing pa e n. To alida e he ola ili y o he GREG, GLOB, GDP, HUMC, and
GREF o e he selec ed pe iod, s anda d de ia ion alues a e assessed. The s udy also
analyzes he non-no mal dis ibu ion o he a iables including Ku osis and Skewness.
Since he no mali y analysis as pe (Ja que & Be a, 1987) is applied, his esea ch
conside s da a no mali y and signi icance conce n. The esul s con i m ha he obse ed
s a is ics exceed he c i ical alue a he 1%, 5%, and 10% signi icance le el.
Consequen ly, he null hypo hesis is ejec ed o each o hese a iables, implying he
p esence o non-linea i y in all o hem.
Table 3 p esen s he esul s o slope he e ogenei y and c oss-sec ional dependence.
The ou comes o he es in oduced by (M. H. Pesa an & Yamaga a, 2008) o he
Table 2. Desc ip i e s a is ics.
GREG GREF GLOB HUMC GDP
Mean 2.127 3.959 76.64 3.116 8.33E+11
Median 1.885 2.740 79.47 3.135 2.51E+11
Maximum 10.33 20.78 90.32 3.721 4.58E+12
Minimum −4.110 0.000 43.88 1.920 9.14E+09
S d. De . 2.119 4.171 10.23 0.384 1.14E+12
Skewness 0.923 2.133 −1.056 −0.568 1.679
Ku osis 6.838 6.915 3.501 2.877 4.861
Ja que-Be a 459.7 849.5 119.5 33.10 373.4
P obabili y 0.000 0.000 0.000 0.000 0.000
14 M. TUFAIL ET AL.
a ge ed model indica e a subs an ial and signi ican del a and adjus ed del a alues
p o iding s ong e idence o ejec he null hypo hesis o he e ogeneous slope and
suppo he al e na i e o he e ogeneous slope a he 1% le el o signi icance. The a ious
inancial amewo ks and in e dependencies among he a ge ed OECD coun ies o e
a plausible explana ion o his he e ogenei y. When an economic phenomenon o e en
occu s in one coun y, i gene a es shockwa es in o he na ions. Fu he mo e, he esul s
o he es (H. Pesa an, 2004) also suppo he accep ance o he al e na i e hypo hesis o
c oss-sec ion dependency o all a iables ound a he 1% and 5% signi icance le els.
This indica es he p esence o c oss-sec ional dependency among he c oss-sec ional
uni s o he da a. The in eg a ion o egional ade and economic ac i i ies amongs
OECD coun ies is among he ac o s con ibu ing o his c oss-sec ional dependency.
These indings align wi h ecen esea ch speci ically ocused on g een g ow h (Chen
e al., 2023; Sha i e al., 2023).
The p esence o c oss-sec ional dependency and slope he e ogenei y in he panel da a
can esul in biased and less in o ma i e esul s. To add ess his issue he s udy employs
he mos upda ed and obus panel uni oo es in oduced by (M. H. Pesa an, 2007).
The ou comes o his es a e p esen ed in Table 4. The esul s con i m ha globaliza ion
(GLOB) and g een inance become s a iona y a he le el. Con e sely, when conside ed
in he i s di e ences he g een g ow h (GREG), economic g ow h (GDP), and human
capi al become s a iona y a a 1 pe cen signi icance le el.
The long- un connec ions be ween he a iables a e es ed using wo di e en coin-
eg a ion es s namely (Ped oni, 1999) and he Johansen-Fishe panel es (Maddala &
Wu, 1999). The esul s om hese es s a e p esen ed in Table 5. The Ped oni coin eg a-
ion es esul s e eal ha six ou o he ele en s a is ics (Panel PP, Panel ADF, Weigh ed
Panel pp, Weigh ed Panel ADF, G oup pp, and also G oup ADF) a e s a is ically
Table 3. Slope he e ogenei y and c oss-sec ion dependence esul s.
Homogenous/He e ogeneous Slope Coe icien Tes ing
~
Δ~
ΔAjus ed
24.587*** 27.277***
Pesa an and Yamaga a (2008) C oss-Sec ion Dependence Tes
GREG GLOB GDP HUMC
8.3924*** 70.162*** 63.649*** 67.862***
GREF
1.3093**
1%, 5%, and 10% signi icance is deno ed by ***, **, and *.
Table 4. Panel uni oo esul s.
Va iable(s)
A Le el A Fi s Di e ence
O de o In eg a ionI0ð Þ I1ð Þ
GREG −2.217 −4.932*** I(1)
GLOB −3.112*** - I(0)
GDP −1.962 −4.636*** I(1)
HUMC 0.219 −3.564*** I(1)
GREF −3.316*** - I(0)
1%, 5%, and 10% signi icance is deno ed by ***, **, and *.
JOURNAL OF APPLIED ECONOMICS 15
signi ican a he 1% and 5% signi icance le els. Fu he mo e, he ou comes indica e he
p esence o a coin eg a ed connec ion be ween he a ge ed a iables a he 1 pe cen
signi icance le el acco ding o Fishe ’s coin eg a ion es ( ace es s a is ics o Max-
Eigen es s a is ics, ega dless). The e o e i can be concluded ha he a iables o
in e es which include g een g ow h, g een inance, globaliza ion, human capi al, and
GDP end o mo e oge he in he long un.
A e es ablishing he coin eg a ion among he a ge ed a iables, we p oceeded o
conduc eg ession analysis o assess he long- un impac o he co e explana o y a i-
ables no ably g een inance along wi h o he con ol a iables including globaliza ion,
human capi al, and economic g ow h on g een g ow h in he case o 19 OECD econo-
mies. To suppo his in es iga ion, we employed he me hod o momen quan ile
eg essions. The esul s o he MMQR analysis a e p esen ed in Table 6. Ou indings
e eal ha g een inance exe s a signi ican and posi i e in luence on g een g ow h
ac oss all quan iles. A one pe cen inc ease in g een inance co esponds o
a 0.015%,0.017%,0.20%, and 0.024% inc ease in g een g ow h p og essing om he
lowe (25
h
pe cen ile) o he highe (90
h
pe cen ile) quan iles. This emphasize he
c i ical ole played by G een inance in os e ing g een g ow h in OECD coun ies. In
hese na ions, g een inance enables he edi ec ion o capi al owa ds en i onmen ally
esponsible and sus ainable en e p ises. Ins umen s such as g een bonds, g een loans,
Table 5. Panel coin eg a ion es esul s.
H0: No coin eg a ion S a is ics P obabili y
Ped oni coin eg a ion es
Panel −0.0386 0.5154
Panel ho 0.4978 0.6907
Panel pp −2.2651** 0.0118
Panel ADF −2.4163*** 0.0078
Weigh ed Panel −0.5307 0.7022
Weigh ed Panel ho −0.3848 0.3502
Weigh ed Panel pp −5.0208*** 0.0000
Weigh ed Panel ADF −5.6811*** 0.0000
G oup ho 1.5458 0.9389
G oup pp −4.0674*** 0.0000
G oup ADF −3.3687*** 0.0004
No. o CE(s) Fishe s a s* ( ace es ) Fishe s a s* (max-Eigen es )
Johansen Fishe Coin eg a ion es
None 277.9*** 181.0***
A mos 1 135.4*** 64.57***
A mos 2 95.80*** 51.38**
A mos 3 76.89*** 52.44**
A mos 4 89.59*** 89.59***
1%, 5%, and 10% signi icance is deno ed by ***, **, and *.
Table 6. Me hod o momen quan ile eg ession (MMQR).
Va iables
Loca ion Scale Quan iles
Q
0.25
Q
0.50
Q
0.75
Q
0.90
GREF 0.0176 0.0033 0.0151*** 0.0173*** 0.0201*** 0.0243***
GLOB −0.0395 −0.0147 −0.0282** −0.0380*** −0.0504*** −0.0689***
HUMC 1.4156 0.4556 1.0667*** 1.3696*** 1.7537*** 2.3265***
GDP −0.1856 −0.4073 −0.1263* −0.1445* −0.4878*** −1.0000***
1%, 5%, and 10% signi icance is deno ed by ***, **, and *.
16 M. TUFAIL ET AL.
and sus ainable mu ual unds incen i ized in es o s o channel hei capi al in o p ojec s
wi h a a o able en i onmen al impac . These p ojec s includes a eas such as ene gy-
e icien buildings, sus ainable anspo a ion sys ems, and enewable ene gy in as uc-
u e. The p omo ion o g een inance ul ima ely con ibu es o he expansion o he eco-
iendly ma ke . Fu he mo e, g een inance ca alyzes inno a ion by o e ing inancial
incen i es o he de elopmen and p omo ion o g een echnology and sus ainable
p ac ices. As inancial ins i u ions e alua e he en i onmen al isk associa ed wi h hei
in es men s hey ecognize he po en ial o ad ancemen in indus ies ha con ibu e o
en i onmen al solu ions. This in u n can d i e he g ow h o g een echnologies
including sola ene gy, wind ene gy, and elec ic ehicles, he eby e olu ionizing ma -
ke s and c ea ing new a enues o g een economic g ow h. The incen i es p o ided by
g een inance sys ems play a c ucial ole in accele a ing he adop ion o hese echnol-
ogies, he eby suppo ing o e all g een g ow h in OECD coun ies. Ou indings align
wi h he conclusion d awn in ecen s udies by Gu e al. (2023), Xu e al. (2023), and
G. Zhou e al. (2022).
The esul s o he MMQR analysis indica e ha globaliza ion has a nega i e and
signi ican impac on g een g ow h ac oss all quan iles. Speci ically, he indings sugges
ha a one pe cen inc ease in globaliza ion is associa ed wi h a 0.028%,0.038%,0.050%,
and 0.068% educ ion in g een g ow h anging om he lowe o high (25
h
pe cen ile) o
he highe (90
h
pe cen ile) quan iles. This phenomenon can be a ibu ed o he ac ha
he expansion o in e na ional ade and p oduc ion has inc eased exis ing en i onmen-
al issues such as de o es a ion, ai pollu ion, and ca bon emissions wi h many p oduc s
a e sing complex supply chains ha span in e na ional bo de s, i becomes inc eas-
ingly challenging o pinpoin he ul ima e esponsibili y o a p oduc ’s ca bon oo p in .
Addi ionally, en i onmen al egula ions ha e o en been elaxed in a o o g owing
economy, c ea ing a delica e adeo be ween sho - e m p og ess and long- e m en i -
onmen al sus ainabili y. The e ec o globaliza ion on g een g ow h can be u he
in luenced by a ia ions in en i onmen al egula ion among OECD coun ies. The
compe i ion o o eign in es men can lead na ions o lowe hei en i onmen al s an-
da ds, esul ing in a “ ace o he bo om” whe e en i onmen al conce ns a e comp o-
mised o economic gains. Such egula o y dispa i ies can c ea e imbalances in g een
g ow h ini ia i es among OECD na ions. These indings a e consis en wi h p e ious
s udies by Ahmad & Wu (2022) and Xuan e al. (2023), while he esul s di e om he
ou comes o Chen e al. (2023).
Table 6 e eals no ewo hy obse a ions: he esul s consis en ly a i m ha
human capi al has a signi ican and posi i e in luence on g een g ow h ac oss all
quan iles. Acco ding o he ou comes in ce e is pa ibus a one pe cen inc ease in
human capi al is associa ed wi h a subs an ial 1.066%,1.369%,1.753%, and 2.326%
inc ease in g een g ow h om low o high (25
h
o 90
h
) quan iles. Human capi al in
his con ex plays a pi o al ole as a ca alys o p og ess and a c ucial d i e o
g een g ow h. This posi i e ela ionship be ween human capi al and g een g ow h
can be a ibu ed o se e al ac o s. Knowledgeable and expe ienced indi iduals a e
be e equipped o iden i y sus ainable solu ions, de elop inno a i e g een echnol-
ogies, and implemen esou ce-e icien p ac ices. In es men s in educa ion and
aining con ibu e o building a wo k o ce ha is well-p epa ed o ackle en i on-
men al challenges c ea i ely and de ise no el app oaches o mo e en i onmen ally
JOURNAL OF APPLIED ECONOMICS 17
iendly me hods. Fu he mo e, he in luence o human capi al ex ends o consume
beha io as i p omo es a heigh ened awa eness o he en i onmen al consequences
associa ed wi h consump ion choices. In o med indi iduals a e mo e likely o make
choices ha suppo sus ainable p oduc s and se ices he eby encou aging busi-
nesses o adop g eene p ac ices o his demand. In he con ex o OECD econo-
mies whe e he e is a high li e acy a e he ole o human capi al in d i ing g een
g ow h becomes especially p onounced. These indings align wi h p io esea ch in
exis ing li e a u e unde sco ing he posi i e ela ionship be ween human capi al and
g een g ow h as e idenced in s udies by Na haniel e al. (2021) and H. Wang e al.
(2023).
Table 6 u he a i ms ha economic g ow h has a nega i e and s a is ically signi i-
can impac on g een g ow h ac oss all quan iles in he case o selec ed 19 OECD
economies. The esul s indica e ha in ce e is pa ibus a 1 pe cen su ge in economic
g ow h is associa ed wi h a educ ion o 0.126%,0.144%,0.487%, and 1.00% in g een
g ow h om low o high (25
h
o 90
h
) quan iles. High a es o economic g ow h a e o en
linked o inc eased esou ce consump ion including heigh ened demand o ene gy,
wa e , and aw ma e ials. I hese esou ces a e no managed sus ainably, i can lead o
en i onmen al deg ada ion and a decline in g een g ow h. Addi ionally, i ’s wo h no ing
ha economic g ow h is ypically measu ed on a qua e ly o annual basis which can
incen i ize sho - e m decision-making. This emphasis on sho - e m gains may esul in
he neglec o long- e m en i onmen al conside a ions in a o o immedia e inancial
bene i s. This phenomenon has been obse ed in p io s udies as demons a ed by Ngo
e al. (2022); and Tu ail, Song, Umu , e al. (2022). The esul s o he MMQR model a e
ou lined in Figu e 3.
I is c ucial o check he obus ness o he model o compa e he esul s wi h he p ima y
model o he s udy. The e o e his s udy employs he causali y es p oposed by Dumi escu
& Hu lin (2012) o conduc ing a obus ness es . The esul s a e de ailed in Table 7,
indica ing he exis ence o bi-di ec ional causali y among all he selec ed a iables. The
a iables GLOB�GREG,GREG�GLOB;GDP�GREG, GREG�GDP, HUMC�GREG,
GREG�HUMC;GREF�GREG;and GREG�GREF show bidi ec ional causali y wi h
each o he a signi icance le els wi h 1%, 5 %, and 10%. These esul s signi y ha
globaliza ion and g een g ow h, economic g ow h and g een g ow h, human capi al and
g een g ow h, and g een inance and g een g ow h cause each o he as s a is ically
p esen ed in Table 7. Fu he mo e, an o e iew o he abb e ia ions can be ound in
Table 8.
Table 7. Causali y es (dumi escu-hu lin).
H
0
Wald S a s Z S a s p alue sð Þ
GLOB�GREG 6.7199*** 5.0033 0.000
GREG�GLOB 8.5600*** 4.7096 0.000
GDP�GREG 6.3474*** 7.6696 0.000
GREG�GDP 7.5330*** 5.1776 0.000
HUMC�GREG 9.7369*** 6.8030 0.000
GREG�HUMC 3.5462** 2.5219 0.011
GREF�GREG 8.6413*** 5.8590 0.000
GREG�GREF 3.2342* 1.9485 0.051
1%, 5%, and 10% signi icance is deno ed by ***, **, and *.
18 M. TUFAIL ET AL.
5. Conclusion, policy ecommenda ions, and limi a ions
The concep o g een inance, which combines economic esou ces wi h en i onmen al
p og ess, has ga ne ed signi ican a en ion in con empo a y inancial and en i onmen-
al li e a u e. Howe e , he e emains a somewha limi ed unde s anding o he ela ion-
ship be ween g een inance and g een g ow h, speci ically in he case o OECD
economies. This s udy con ibu es no el insigh o he exis ing body o esea ch by
sc u inizing he impac o g een inance on g een g ow h in he p esence o human
capi al, globaliza ion, and economic g ow h o panel o 19 selec ed OECD economies
o e he pe iod 1990 o 2021. Employing igo ous econome ic me hods his s udy
p oduces eliable and solid indings. I is no ewo hy ha he model su e s om slope
he e ogenei y and he c oss-sec ions a e dependen . All a iables in he analysis exhibi
mixed o de in eg a ion, wi h some exis ing a a le el while o he s equi e i s di e en-
cing. Mo eo e , long- un coin eg a ion is e iden among all unde in es iga ion in his
s udy. The indings emphasize he signi icance o g een inance, human capi al, globa-
liza ion, and economic g ow h in he con ex o g een g ow h. No ably an inc ease in
g een inance and enhanced human capi al con ibu e posi i ely o g een g ow h in he
sample OECD economies. In con as , Globaliza ion and GDP show a nega i e associa-
ion wi h g een g ow h. Fu he mo e, he s udy shows compelling e idence o bidi ec-
ional causali y among all he a iables a ge ed in he analysis.
This s udy sugges s speci ic policy implica ions based on he indings. Fi s , i
ecommends ha OECD coun ies os e g een inance by ins i u ing consis en and
anspa en egula ions ha suppo en i onmen ally esponsible in es men s. These
measu es include he es ablishmen o explici c i e ia delinea ing g een in es men ,
ensu ing s anda dized epo ing on en i onmen al impac s, and in oducing ax
incen i es aimed a incen i izing indi iduals and businesses o in es in sus ainable
sec o s. Collec i ely hese measu es se e o p omo e g een g ow h by a ac ing
inancial suppo o eco iendly p ojec s, enhancing anspa ency, and educing
inancial ba ie s o hose in e es ed in championing en i onmen ally bene icial
ini ia i es. Second i is sugges ed ha expanding he g een bond ma ke ep esen s
a s a egic app oach o acili a e he inancing o en i onmen ally esponsible ini ia-
i es in he case o OECD economies. G een bonds a e inancial ins umen s pu po-
se ully designed o inance en i onmen al p ojec s. Fu he mo e, inancial ins i u ions
can be encou aged o c ea e and p omo e hese bonds he eby os e ing hei g ow h.
These bonds a e s uc u ed ollowing g een in es men c i e ia, ende ing hem
appealing o socially and en i onmen ally conscious in es o s. Addi ionally, go e n-
men s can issue g een bonds o aise unds o en i onmen ally iendly p og ams
and ini ia i es. In doing so, hey no only demons a e hei commi men o sus ain-
abili y bu also a ac in es men om indi iduals and ins i u ions in e es ed in
suppo ing en i onmen al causes. This de elopmen o he g een bond ma ke
inc eases he a ailabili y o capi al o p ojec s con ibu ing o en i onmen al well-
being he eby consolida ing ac ions o achie e en i onmen al sus ainabili y. Thi d i
is sugges ed ha collabo a ion wi h bo h OECD and non-OECD na ions is c i ical o
es ablishing s anda dized no ms in g een inance and os e ing in e na ional in es -
men in sus ainable ini ia i es. This collabo a ion necessi a es ac i e engagemen in
in e na ional clima e acco ds and ini ia i es designed o align na ional policies wi h
JOURNAL OF APPLIED ECONOMICS 19
global sus ainabili y objec i es. Th ough pa icipa ion in hese in e na ional ini ia-
i es, coun ies can ha monize hei app oaches o g een inance he eby es ablishing
consis en s anda ds and egula ions ha acili a e c oss-bo de in es men s in en i -
onmen ally esponsible p ojec s. This no only se es o channel mo e unding
owa ds sus ainable ini ia i es bu also ensu es ha na ions wo k collec i ely owa d
a sha ed goal o comba ing clima e change and p omo ing g een g ow h on a global
scale.
The s udy is subjec o ce ain limi a ions. Fi s and o emos , i is essen ial o no e ha
he s udy scope is cons ained o he in es iga ion o 19 OECD economies. O iginally, we
in ended o encompass all 37 OECD economies. Howe e , due o da a limi a ions, he
selec ion was educed om 37 o 19 economies. Addi ionally, despi e ou ini ial objec i e
o co e da a up o he yea 2023 limi a ions in he a ailable da a cons ained us o
es ic ou empi ical analysis o da e up o 2021. Fu he mo e, i would be o signi ican
in e es o u u e esea ch o conside he impac o ecen global c ises like he Is ael-
Pales inian con lic he Russia- Uk aine con lic , and he economic consequences o
COVID-19. These c ises ha e signi ican ly dis u bed he global economic landscape,
and an in es iga ion in o hei e ec s could yield aluable insigh s. Mo o e his s udy
ocuses on OECD economies as a case s udy, u u e esea ch s udies could explo e o he
economic g oups such as BRICS, G7, and G8 po en ially leading o in o ma i e and
inno a i e indings. Addi ionally, he e is po en ial o u he esea ch o examine he
ela ionship be ween g een inance and a ious o he ac o s including social, go e n-
ance, and en i onmen al dimensions. Analyzing hese mul idimensional ela ionships
could may p o ide a mo e comp ehensi e unde s anding o he dynamics a play in
g een inance ini ia i es.
Abb e ia ions
OECD O ganiza ion o Economic Coope a ion and De elopmen
MMQR Me hod o Momen Quan ile Reg essions
ARDL Au o Reg essi e Dis ibu i e Lag
EKC En i onmen al Kuzne s Cu e
GREG G een G ow h
GREF G een Finance
GLOB Globaliza ion
GDP G oss Domes ic P oduc
HUMC Human Capi al
R&D Resea ch and De elopmen
Acknowledgmen s
We a e g a e ul o he help ul commen s and sugges ions p o ided o us by Thomas Zieseme
(Associa e edi o ) and he wo anonymous e e ees.
Disclosu e s a emen
No po en ial con lic o in e es was epo ed by he au ho (s).
20 M. TUFAIL ET AL.
No es on con ibu o s
Muhammad Tu ail is a Ph.D. candida e in he School o Economics and Finance, a Xi’an Jiao ong
Uni e si y China. His esea ch in e es s ocus on En i onmen al Economics, Ene gy Economics,
and Economics o C ime. His esea ch wo k has been published in jou nals like Ene gy Policy,
Sus ainable De elopmen , Jou nal o Cleane P oduc ion, Economic Resea ch-Ekonomska
Is aži anja and Jou nal o he Knowledge Economy, e c.
P o esso Lin Song is a supe iso o Ph.D. candida es a he School o Economics and Finance,
Xi’an Jiao ong Uni e si y China. He has a as eaching expe ience in di e en ins i u ions. F om
1993 o 2000 he was a counselo and eaching assis an a he Indus ial Economics Depa men a
he o me Shaanxi Ins i u e o Finance and Economics. F om 2000 o 2007 he pe o med a
lec u e pos a he School o Economics and Finance a Xian Jiao ong Uni e si y. F om 2010 o
2011 he was a isi ing schola o he China Schola ship Council a he Uni e si y o No ingham
UK. F om 2011 he wo ked as a Doc o al Supe iso and go a P o esso ship in 2012. His esea ch
ield is Labo Ma ke , Indus ial O ganiza ion, and Co po a e Go e nance. P o esso Song has
won se e al p es igious awa ds ela ed o his esea ch wo k om GOC. Mo eo e , his esea ch
wo k has been published in jou nals such as Resou ces Policy, Asian- Paci ic Economic Li e a u e,
Economic Resea ch-Ekonomska Is aži anja and Jou nal o he Knowledge Economy, e c.
D Zeeshan Khan has comple ed his Ph.D. deg ee om Cu in Uni e si y Malaysia. Be o e his, he
se ed as a Resea ch Assis an a Tsinghua Uni e si y China om 2017 o 2021. His esea ch
ocuses on En i onmen al Economics, Ene gy Economics, In e na ional T ade, and
Mac oeconomics. His schola ly con ibu ions ha e been ea u ed in enowned in e na ional
jou nals, including Ene gy Economics, Ene gy Policy, Technological Fo ecas ing and Social
Change, Technology and Socie y, and Resou ces Policy, e c. In ecogni ion o his esea ch
excellence, D Zeeshan Khan anked among he op 2% and 1% o highly ci ed esea che s in
2022 and 2023 as well. Addi ionally, he has aken on he ole o a Gues Edi o o F on ie s in
En i onmen al Sciences and he Poli icka Ekonomie Jou nal.
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