Financial market development: A potentiating policy choice for the green transition in G7 economies |
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| Affiliation: | 1. Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan;2. Excelia Business School, La Rochelle, France;3. School of Economics, Qingdao University, Qingdao, Shandong, China;1. University of Ghana Business School, Accra, Ghana;2. Lahore College for Women University Lahore, Pakistan;3. Indian Institute of Management Bodh Gaya, Bodh Gaya, India;4. School of Economics and Management, Nanchang University, China;1. Audencia Business School, Research Center: Markets Technology and Society, 8 Route de la Joneliere, 44312 Cedex 3, Nantes, France;2. Heriot Watt University, Accounting, Economics and Finance SEEC, CFI, Edinburgh, Scotland EH14 4AS, UK;1. School of Accounting, Capital University of Economics and Business, Beijing 100070, China;2. Business School, University of International Business and Economics, Beijing 100029, China;3. School of Economics and Management, Tsinghua University, Beijing 100190, China;1. Excelia Business School, La Rochelle, France;2. School of Economics, Qingdao University, Qingdao, Shandong, China;4. School of Economics and Business, University of Sarajevo, Bosnia and Herzegovina |
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| Abstract: | Despite the overwhelming literature claiming the environmental benefits of the transition towards a green economy, the evidence favoring these broad claims is still obscure and fuzzy. The present study makes two significant contributions to this important yet unsettled issue. First, we segregate the overall green transition in G7 economies into three different manifestations i.e., Green Energy, Green Industry, and Green Trade, to evaluate their idiosyncratic effects on the environment. Second, we assess the moderating role of financial development in green transition and ultimately in achieving the COP-26 targets. Our findings indicate that the transition towards green energy and the green industrial sector improves environmental quality, and the benefits are more pronounced with a high degree of financial development. In contrast, the transition towards green trade does not help in improving environmental quality and may have some adverse effects; however, financial development could mitigate some of these undesirable effects and help combat carbon emissions. The study emphasizes that policymakers should view financial development as a crucial policy choice to achieve COP-26 targets owing to its benign environmental impact. |
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