Green finance, innovation, and sustainable development: Panel evidence from G7 economies
Asian Economic and Financial Review, vol.16, no.4, pp.34-48, 2026 (Scopus)
- Publication Type: Article / Article
- Volume: 16 Issue: 4
- Publication Date: 2026
- Doi Number: 10.55493/5002.v16i4.5999
- Journal Name: Asian Economic and Financial Review
- Journal Indexes: Scopus, ABI/INFORM, EconLit
- Page Numbers: pp.34-48
- Keywords: Climate change, Green finance, Green technological innovation, Natural resource rents, Quantile regression, Sustainable development
- Open Archive Collection: AVESIS Open Access Collection
- Ondokuz Mayıs University Affiliated: Yes
Abstract
To achieve sustainability, economies tend to rely on green financing strategies and green technologies. Although green finance and green technological innovation have their own influence, when combined, they form an effective catalyst for environmental advancement and sustainable development. This endeavor explores the complementary role of green finance and technological innovation in advancing sustainable development within the G7 economies. Previous studies have primarily focused on the direct or linear effects of these factors on sustainability outcomes. This study considers the distributional dynamics to estimate the model of sustainable development. Using a balanced panel dataset covering the period 1990–2022, we employ the quantile regression framework to capture the heterogeneous effects of variables across different levels of sustainable development. The empirical findings reveal a strong complementarity between green finance and technological innovation, demonstrating that their interaction significantly enhances sustainable development outcomes. These results underscore the critical role of adequate financial support in facilitating the effective adoption and diffusion of green technologies. Among the control variables, natural resource rents and environmental policy stringency are found to exert a negative influence on sustainable development, while energy productivity contributes positively. In terms of policy implications, findings suggest that the allocation of more financial resources towards green technological innovation is important for sustainable development.