The impact of green finance, natural resource, financial development, and institutional quality on environmental sustainability: empirical evidence from GCC nations, Md Shabbir Alam, Palanisamy Manigandan

Md Shabbir Alam*
Department of Economics and Finance, College of Business Administration, University of Bahrain
Sakhir, P.O. Box, 2038
Bahrain
Palanisamy Manigandan
Department of Statistics, Periyar University, Salem
Tamil Nadu P.O. Box 636011
India

Abstract: Climate change represents a major concern for GCC countries and reducing carbon emissions has become a critical component of environmental and economic policy. This study examines the relationship between green finance (GF), natural resources (NR), financial development (FIN), institutional quality (IQ), and environmental quality in GCC economics over 1990-2023 period by applying a random effects model with the Driscoll-Kraay and two-step system generalized method of moments (SGMM) estimator. The empirical results reveal that GF, NR, and FDI stimulate carbon dioxide emissions (CO2E), whereas IQ enhance environmental sustainability. Additionally, the interaction effect of IQ with GF and FDI was found to lessen CO2E, whereas the interaction effect of IQ with NR increased CO2E in GCC economics. Several policy implications have been proposed to help GCC countries reduce emissions towards achieving sustainable development goals (SDGs). Capital investment in green projects and clean energy requires further attention.

Keywords: GCC Countries, Green Finance, Natural Resources, Financial Development, Human Capital, Institutional Quality, Environmental Quality.