THE IMPACT OF GREEN FINANCE AND TECHNOLOGICAL INNOVATION ON SUSTAINABLE GROWTH: THE MODERATING ROLE OF INSTITUTIONAL QUALITY

Abstract

Abstract In the context of climate change and the growing need for sustainable development, green finance and technological innovation have become important instruments for achieving economic growth while ensuring environmental protection. This study investigates the effects of green finance and technological innovation on sustainable growth in 86 countries, including 40 developed and 46 developing countries, over the period 2010 to 2024. The study applies pooled ordinary least squares regression, fixed effects models, random effects models and generalized method of moments estimation to address endogeneity and the dynamic characteristics of panel data. The empirical findings indicate that green finance may have a negative short-term effect on sustainable growth, whereas technological innovation contributes positively to sustainable growth, particularly in developing countries. Institutional quality is also identified as a key condition that enhances the effectiveness of green finance and technological innovation in promoting sustainable growth. The results suggest that countries should strengthen institutional quality, improve the efficiency of resource allocation and support technological innovation to maximize the benefits of green finance in the transition toward sustainable growth.