Unlocking the green vault: A comparative analysis on the impact of green financing initiatives in mitigating ecological footprint in Europe

Abstract

The recent global concerns over environmental degradation spark interest in sustainable financial mechanisms, with momentum behind environmentally-friendly financing initiatives growing as a potential solution to ecological sustainability. This study analyzes asymmetric green finance-ecological footprint nexus in ten leading European nations with substantial investments in green finance. Previous investigations explored this relationship using panel data analysis, although few economies could not show such a relation separately. In contrast, this investigation employs the “Quantile-on-Quantile” technique, which dissects the interaction of time series data within every nation. The findings demonstrate a negative impact of green finance on ecological footprint, particularly within specific segments of the data distribution. The findings highlight the imperative for policymakers to exercise careful consideration while implementing policies related to green finance and ecological sustainability. Targeted regulatory frameworks, incentivization strategies for sustainable investments, and promoting eco-conscious financial products could be critical aspects to consider within the policy framework.

Keywords

• Green finance
• Ecological footprint
• Quantile estimation