Green finance and energy natural resources nexus with economic performance: A novel evidence from China

Abstract

The role of green finance and environmental innovation has become crucial, especially post-COP27 targets. Green finance, especially in the context of growing climate-related problems has become crucial. Therefore, unlike past studies, this study adds to the literature by checking the impact of environmental innovation, renewable energy, and green finance on sustainable economic performance. Sustainable economic performance originated from cleaner production processes has become inevitable. This study used time series data from 1994 to 2021. Several time series methods applied are used in the study which includes the ADF test for unit root and Bayer-Hanck for equilibrium while for primary methods, the study included a novel MMQR approach. For robustness check analysis, we use FMOLS, DOLS, CCR, and robust regression analysis. The outcomes indicate that variables are found static at the difference and long-term cointegration has been found among variables. The study found that green innovation or environmental innovation with green finance and renewable energy sources encourages economic growth. Moreover, the results of natural resources confirm the resource curse in China while financial development and human capital improve economic growth. In terms of rankings, the shares of green finance are higher followed by renewable energy electricity output and environmental innovation. The study recommends more green financing with environmental innovation and renewable energy. The study has of great impact on policymakers.