Investigating the Nexus of Control of Corruption, Green Finance, and Environmental Upgradation in Developed Economies

Abstract

This comprehensive study investigates the intricate relationships among three pivotal components: green finance, corruption control, and ecological footprint, with the primary objective of revealing the synergies shaping sustainable development. The research examines how environmentally aligned financial practices, effective anti-corruption measures, and responsible resource management collectively influence the ecological footprint within the top 10 developed economies, offering insights into strategies for fostering sustainable growth. Ecological footprint (EFT) data was obtained from the Global Footprint Network, while green finance (GFIN) data was sourced from the Asian Development Bank. The panel data used in the study spanned 18 years from 2000 to 2018 for the 10 selected countries. To address issues of endogeneity and unobserved heterogeneity, the system generalized method of moments (GMM) was employed for hypothesis testing. By employing advanced modeling techniques, particularly the system generalized method of moments, the study verifies the positive impact of green finance in reducing the ecological footprint and carbon emissions, providing actionable insights for policymakers and practitioners in the OECD. Formulating two hypotheses, it assesses the positive relationship between green finance (GFIN) and ecological footprint (EFT) while considering control variables, and the negative relationship between GFIN and carbon emissions (CO2). Furthermore, it underscores the significance of control variables, such as control of corruption, population, GDP, and trade openness, in influencing ecological footprints and carbon emissions. These findings contribute invaluable insights for policymakers and stakeholders, guiding the path toward sustainable practices and a greener future in developed nations.