EXPLORING THE IMPACT OF GREEN ENVIRONMENT ON ECONOMIC GROWTH: THE ROLE OF FINANCIAL DEVELOPMENT - A BAYESIAN QUANTILE REGRESSION APPROACH
DOI:
https://doi.org/10.18623/rvd.v22.n6.4001Abstract
Despite environmental concerns, we believe that the benefits outweigh the costs. This study examines the actual impact of the green environment (GE) on economic growth (GDP) and investigates the moderating role of financial development (FD) across 65 countries worldwide over the period 2004 to 2020. Using the Bayesian quantile regression approach, the study evaluates the effect of the green environment across different distributions of economic growth and explores the moderating role of FD. The results show that the green environment has a strong and positive effect on GDP across all quantiles. This finding confirms the important role of the green environment in promoting national economic growth. Notably, FD has a positive relationship with GDP, and when considered in the relationship between GE and GDP, FD amplifies this relationship. These findings highlight the influence of the green environment and the important role of financial development, suggesting that countries should optimize the benefits of GE to promote sustainable economic growth. In addition, policies aimed at improving the financial system are needed to strengthen the impact of GE on GDP.
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