Towards sustainable development: Investigating the effect of green financial indicators on renewable energy via the mediating variable

Abstract

Green financing is essential because it guarantees that initiatives that seek to reduce the world's reliance on fossil fuels receive the necessary funding to be successful. Green financial metrics can be simultaneously made possible by specialized technological innovation and natural resource rent, thereby encouraging the adoption of sustainable energy. In this paper, we investigate the mediating mechanisms underlying the relationship between green financial indicators and renewable energy consumption RNEC and we contribute to the ongoing discussion surrounding this relationship. Our observational example is derived from data collected for 66 countries between 2004 and 2019 using a panel threshold regression model defined with the difference generalized method of moments (GMM). We find that green funding initiatives have accelerated the adoption of renewable energy sources by encouraging increases in the proportion of renewable energy in the fuel supply. Multiple analyses of reliability corroborate the existence of this link. Green funding has been shown to have an encouraging effect on the transition to renewable energy, and our findings indicate that technological advancement and natural resource leasing serve to mitigate this effect. To assist policymakers in reducing the world's reliance on polluting energy, our study demonstrates how green financial markets can be established through improved technological innovation and natural resource management.