Green finance and ecological footprints: Natural resources perspective of China’s growing economy

Abstract

Economies across the globe are targeting various economic and financial instruments to attain environmental sustainability. This study explores the influence of green finance on ecological footprints in the case of Chine throughout 1998Q1-2020Q4. Also, it analyze the role of renewable electricity output, natural resources, economic growth, and research and development in realizing ecological footprint. Using time series cointegration approach, the study validates the long-run equilibrium relationship between variables. Three long-run estimators have been used to attain coefficients for each variable. The results asserted that economic growth and natural resources are vital in increasing environmental pollution. However, green finance, research and development expenditure, and renewable electricity significantly reduce ecological footprints and strengthen environmental sustainability. The Granger causality test depicts the bidirectional causal connection between the variables, except for green finance. The results suggest the enhancement in green financing budget, research and development expenditure, and renewable electricity investment are imperative to ensure ecological sustainability.