THE ROLE OF GREEN TRADE, GREEN ENERGY TECHNOLOGIES, AND GREEN FINANCE ON ENVIRONMENTAL DEGRADATION: EVIDENCE FROM ASEAN COUNTRIES

Abstract

Green finance and green technology play a crucial role in achieving sustainable environmental performance by channelizing funds into eco-friendly projects and driving the development of environmentally responsible technologies and solutions. Traditional finance and technology innovation are not capable enough to facilitate the transition to a low-carbon economy, reduce resource consumption, emissions, and environmental impact, and contribute to environmentally responsible economic growth. Modern literature lacks enough evidence on the effect of green finance and green technology on environmental performance, especially for OECD countries. By using a panel dataset of OECD countries from 2010 to 2021, this paper probes into the status quo to what extent green finance, green technology, and selected control variables (economic growth, urbanization, and trade openness) are successful to mitigate environmental degradation. Utilizing robust methodology, study employs second-generation unit root tests, cointegration frameworks tailored for cross-sectionally correlated panel variables and quantile regression. The study finds the presence of enduring relationships among said factors. Quantile regressions at varying points of the environmental performance spectrum reveal that green finance and green technology play pivotal roles in enhancing environmental sustainability, with amplified benefits for OECD countries. Economic growth exhibits a context-dependent U-shaped relationship with environmental performance. Urbanization consistently hampers environmental performance, particularly in high-performing nations. Trade openness displays mixed findings. The study has some important policy implications. Policy-wise, global governments should prioritize green innovations and sustainable finance since fostering sustainable finance environments and eco-friendly technology research are crucial for greener futures and essential to achieve sustainable development goals.