Financial development and natural resource efficiency: Unlocking green growth potential

Abstract

The study aims to test the nexus between financial development and natural resource efficiency to determine the green growth potential. The correlation between financial development and natural resource efficiency has been a topic of much scholarly and policy discussion. This research seeks to investigate the complex connection within the specific setting of China between the years 2000 and 2019. The empirical analysis uses the Autoregressive Distributed Lag (ARDL) model. The study examines how progress in the finance industry might facilitate green economic expansion by improving the effective exploitation of natural resources. The results of our study demonstrate a strong and lasting connection between measures of financial progress and metrics of natural resource efficiency. More specifically, enhanced availability of finance improved financial literacy, and higher investment in sustainable initiatives have been shown to have a favorable effect on the effective use of natural resources.