The Causal Relationship Between Green Bonds, Environmental Performance, and Green Growth: An Empirical Study of Developed Countries

Authors : Cem Sehil, Yusuf Tepeli

Pages : 113-134

Doi:10.25095/mufad.1598836

View : 134 | Download : 195

Publication Date : 2026-01-02

Article Type : Research Paper

Abstract :This study investigates the causal relationship between green bonds -an essential component of green financial instruments- green growth, and environmental performance indicators in developed countries. Data from the period 2014–2022 were analyzed using the Dumitrescu-Hurlin Panel Causality Test, based on a sample of 189 observations. Green bonds are financial instruments issued to fund environmentally sustainable projects, with the aim of fostering sustainable development. The analysis explores the nature of the relationship (whether causal, bidirectional, or unidirectional) between green bond issuance and national environmental performance indicators. The results indicate a unidirectional causal relationship running from green growth to the issuance of green bonds, with no evidence of causality in the reverse direction. Furthermore, a bidirectional causality was found between environmental protection expenditures and green bond issuance. These findings underscore the importance of financial instruments in advancing green growth and environmental sustainability objectives, suggesting that green finance could play a pivotal role in shaping future environmental policies.
Keywords : Yeşil Finansman, Çevresel Harcamalar, Yeşil Büyüme, G20

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