Green Finance and Economic Growth: Empirical Evidence from Panel Data Using CCEMG and PCSE Methods

Authors : Asuda Yunusova Ceviz

Pages : 95-111

Doi:10.59445/ijephss.1710694

View : 64 | Download : 22

Publication Date : 2025-07-02

Article Type : Research Paper

Abstract :This article constructs a comprehensive Green Finance Index (GFI) to explore the connection between sustainable finance and economic growth across 43 developed and developing countries, as classified by the International Monetary Fund (IMF), over the period 2013 to 2023. The GFI is developed based on three core dimensions—Finance, Environment, and Economy—using indicators such as green bonds, green loans, green investments, greenhouse gas emissions, forestry, and energy intensity of the economy. A min-max normalization method is employed to ensure comparability across countries and overtime. Using the Common Correlated Effects Mean Group (CCEMG) estimator as the primary methodology and the Panel-Corrected Standard Errors (PCSE) approach as a robustness check; the study investigates both the long-term and short-term dynamics of this relationship. The results reveal a clear contrast between short-run and long-run effects: while trade openness demonstrates a statistically significant and immediate impact on economic growth in the short run, green finance exerts its influence primarily over the long term. This suggests that sustainable financial investments contribute to economic development in a gradual and structural manner, highlighting the importance of long-term policy commitment and integration of green finance mechanisms into national and international economic strategies.
Keywords : Yeşil finans endeksi, CCEMG, Ekonomi büyüme

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