New challenges for green finance and sustainable industrialization in developing countries: A panel data analysis

Abstract

This paper uses the fixed-effect model, the S-GMM, and the Kinky least square method to investigate the effect of green finance on sustainable industrialization for a panel of 56 developing countries over the period 2000–2021. Accordingly, we propose a per region panel data analysis of the relationship between green finance and sustainable industrialization for three different regions: Africa, Asia, and South America. Our findings show that green finance contributes positively and significantly to improving sustainable industrialization in most of the developing countries under consideration, but that the effect is more pronounced for Asia and South America. This suggests that for a robust environmental result, these developing countries should make greater use of environmentally friendly sources of finance, which can help to reorient their industries toward greater sustainability as well as fight the main economic challenges: unemployment, poverty, inequality, and social injustice.