Investigating the impact of green finance on sustainable industrialization in oecd countries: Exploring the moderating role of green innovation

Abstract

Rapid industrialization has introduced considerable environmental challenges, prompting the OECD and the international community to address the intricate task of harmonizing economic expansion with ecological preservation. Advancing sustainable industrial efficiency via the implementation of green finance has become a crucial priority for driving economic development, aligning with the goals of SDG-9, SDG-16, and SDG-17, while garnering attention from both researchers and policymakers. This study seeks to assess the effects of green finance on the industrialization processes of 21 OECD nations from 2000 to 2023, while additionally examining the moderating role of green innovation, indicated by renewable energy consumption. Utilizing the System Generalized Method of Moments (SGMM) approach and performing robustness checks with industry-specific metrics, the research presents empirical evidence that: (1) both green finance and green innovation foster sustainable industrialization, and (2) the interaction between green finance and green innovation produces a positive net effect, indicating that green innovation amplifies the beneficial impact of green finance on industrialization in OECD, though the extent and nature of these effects vary across different industries. These findings carry profound policy implications for various stakeholders in the green finance sector, including consumers, corporations, financial institutions, and governmental agencies