Green Finance and Sustainable Development: Exploring Dynamic Causal Links and Global Implications

Departement of Finance, Mittal School of Business, Lovely Professional University, Phagwara, Punjab, India

^* Corresponding author: swaty.27997@lpu.co.in

Abstract

This research investigates the potential causal relationship among sustainable development and green finance on a world level, using data from 2011 to 2023. In this study, the researcher utilized the bootstrap rolling-window Granger causal relationship test to investigate the contributions of different stakeholders to sustainable development by participating in green finance initiatives. The results of the analysis demonstrate that green finance has a positive impact on sustainable development across different time periods. While green finance represents a crucial financing mechanism for advancing sustainable development goals, its direct influence on SD remains unproven. Additionally, this analysis identifies distinct causal relationships in different sub periods, emphasizing the importance of context-specific causality. Moreover, in specific contexts, the direction of causality holds significant implications. Therefore, we propose that governments and international organizations play a pivotal role in guiding high-quality green investments and implementing risk mitigation strategies within the established system framework. Furthermore, enhancing the standards for categorizing green finance, developing comprehensive evaluation systems, and promoting transparent information disclosure related to GF can foster greater contributions by countries to sustainable development initiatives.