Decoding the environmental effects of green finance, renewable energy, financial development, and globalization through quantile on quantile and wavelet coherence analysis

Abstract

This study investigates the complex and nonlinear interplay between green finance, financial development, renewable energy consumption, globalization, and Vietnam’s ecological footprint during 2000–2021. The original annual data were transformed into quarterly frequency using the quadratic match-sum approach to enable robust dynamic analysis. Advanced methodologies are employed based on quantile-dependent and non-linear behaviors, including quantile-on-quantile regression and wavelet coherence analysis, to uncover dynamic interactions across different time periods and quantiles. Key findings indicate that while renewable energy consumption consistently and significantly reduces the ecological footprint, particularly in high-impact scenarios, the effects of green finance are varied, showing a positive correlation with environmental strain at lower quantiles. Financial development exhibits an inverted U-shaped relationship, transitioning from initial environmental pressure to subsequent mitigation as the system matures. In contrast, globalization has persistently intensified ecological pressure, with adverse impacts becoming increasingly severe in recent years. Based on these results, this study provides actionable policy implications, including expanding green finance frameworks, prioritizing rapid adoption of renewable energy, aligning financial development with sustainability objectives, and integrating robust environmental safeguards into globalization initiatives. These evidence-based insights are essential for guiding Vietnam toward balancing sustainable economic growth with environmental protection.