From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty
Green innovation (GI) is increasingly recognized as an essential strategy for tackling urgent environmental issues, such as climate change, resource depletion, and pollution. While research is expanding on how economic policy uncertainty (EPU) affects GI, the influence of financial sector developme...
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2025-04-01
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| Series: | Technological and Economic Development of Economy |
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| Online Access: | https://mla.vgtu.lt/index.php/TEDE/article/view/23268 |
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| author | Huiyuan Han Umar Farooq Mohammad Mahtab Alam Mosab I. Tabash Khurshid Khudoykulov Juanjuan Chen |
| author_facet | Huiyuan Han Umar Farooq Mohammad Mahtab Alam Mosab I. Tabash Khurshid Khudoykulov Juanjuan Chen |
| author_sort | Huiyuan Han |
| collection | DOAJ |
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Green innovation (GI) is increasingly recognized as an essential strategy for tackling urgent environmental issues, such as climate change, resource depletion, and pollution. While research is expanding on how economic policy uncertainty (EPU) affects GI, the influence of financial sector development (FSD) as a moderator in this context remains under-examined. To address this gap, we conduct an empirical analysis utilizing two decades of data (2000–2019) from five major emerging economies (BRICS). The study employs FMOLS and DOLS models to scrutinize the data. The findings indicate that EPU has a considerable adverse effect on GI, suggesting that uncertainty in economic policies can obstruct environmentally sustainable progress. In contrast, FSD demonstrates a notable positive association with green innovation, indicating that a robust financial sector can support and bolster these initiatives. Furthermore, the study identifies that FSD serves a crucial intermediary function in the EPU-GI connection. The policy implications of this study are significant, indicating that decision-makers should prioritize enhancing financial sector institutions to foster GI, particularly in times of heightened economic volatility. By providing new evidence regarding the dynamics between EPU, FSD, and GI, this investigation offers valuable insights for developing policies that harmonize economic stability with environmental sustainability.
First published online 1 April 2025
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| format | Article |
| id | doaj-art-e791eb8efc5744b0b92cd4f9ba8ba2af |
| institution | DOAJ |
| issn | 2029-4913 2029-4921 |
| language | English |
| publishDate | 2025-04-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Technological and Economic Development of Economy |
| spelling | doaj-art-e791eb8efc5744b0b92cd4f9ba8ba2af2025-08-20T02:53:43ZengVilnius Gediminas Technical UniversityTechnological and Economic Development of Economy2029-49132029-49212025-04-0110.3846/tede.2025.23268From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty Huiyuan Han0Umar Farooq1Mohammad Mahtab Alam2Mosab I. Tabash3Khurshid Khudoykulov4Juanjuan Chen5School of Financial Technology, Shanghai Lixin University of Accounting and Finance, Shanghai, ChinaSchool of Economics and Finance, Xi’an Jiaotong University, Xi’an, Shaanxi, P. R. ChinaDepartment of Basic Medical Sciences, College of Applied Medical Science, King Khalid University, Abha, Saudi ArabiaCollege of Business, Al Ain University, Al Ain, United Arab EmiratesDepartment of Finance and Financial technologies, Tashkent State University of Economics, Tashkent, UzbekistanSchool of Economics & Management, Anhui University of Science & Technology, Huainan, China Green innovation (GI) is increasingly recognized as an essential strategy for tackling urgent environmental issues, such as climate change, resource depletion, and pollution. While research is expanding on how economic policy uncertainty (EPU) affects GI, the influence of financial sector development (FSD) as a moderator in this context remains under-examined. To address this gap, we conduct an empirical analysis utilizing two decades of data (2000–2019) from five major emerging economies (BRICS). The study employs FMOLS and DOLS models to scrutinize the data. The findings indicate that EPU has a considerable adverse effect on GI, suggesting that uncertainty in economic policies can obstruct environmentally sustainable progress. In contrast, FSD demonstrates a notable positive association with green innovation, indicating that a robust financial sector can support and bolster these initiatives. Furthermore, the study identifies that FSD serves a crucial intermediary function in the EPU-GI connection. The policy implications of this study are significant, indicating that decision-makers should prioritize enhancing financial sector institutions to foster GI, particularly in times of heightened economic volatility. By providing new evidence regarding the dynamics between EPU, FSD, and GI, this investigation offers valuable insights for developing policies that harmonize economic stability with environmental sustainability. First published online 1 April 2025 https://mla.vgtu.lt/index.php/TEDE/article/view/23268BRICSeconomic policy uncertaintyfinancial sector developmentgreen innovation |
| spellingShingle | Huiyuan Han Umar Farooq Mohammad Mahtab Alam Mosab I. Tabash Khurshid Khudoykulov Juanjuan Chen From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty Technological and Economic Development of Economy BRICS economic policy uncertainty financial sector development green innovation |
| title | From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty |
| title_full | From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty |
| title_fullStr | From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty |
| title_full_unstemmed | From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty |
| title_short | From uncertainty to opportunity: financial development as bridge to green innovation under economic policy uncertainty |
| title_sort | from uncertainty to opportunity financial development as bridge to green innovation under economic policy uncertainty |
| topic | BRICS economic policy uncertainty financial sector development green innovation |
| url | https://mla.vgtu.lt/index.php/TEDE/article/view/23268 |
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