The Effects of Green Financial Development on Economic Growth in Pakistan

Abstract

Sustainable development is now a mantra for which every country is striving for it and green finance, and green financial development which is advancement in financial activities harmonized with environmental protection and ecological balance, is considered as the foremost solution for it. Keeping in view the importance of green financial development for the economic growth, this study aims to examine the effects of green financial development such as green credit, green securities, green insurance, green investment, and foreign direct investment on the economic growth of Pakistan. The time series has extracted from World Development Indicators (WDI) and State Bank of Pakistan (SBP) for the period 1981 to 2019. For the analysis purpose, Autoregressive distributive lag (ARDL) and Granger casualty have been executed. The findings established empirically that green financial development such as green credit, green securities, green insurance, green investment, and foreign direct investment have a positive impact on the economic growth of Pakistan. These findings provide the insight to the regulators that they should enhance their focus towards green financial development that is imperative for the economic growth of the country.