The Impact of Financial Development and Innovation on Green Growth: An Empirical Investigation on Emerging Countries

This paper investigates the impactImpact of financial development and innovationInnovation on green growth in 15 emerging countriesEmerging countries. We apply a fixed effect model with feasible generalized least squares (FGLS) based on the Parks-Kmenta method in the period of 1995–2019. Domestic creditsCredit by banks and stock market returns are a proxy of financial development. Patent application growth represents innovationInnovation. Foreign direct investments, Human Development Index, and urbanization are used as control variables. We examine green growth by adding resource depletion and carbon emissions impairment from GDP Empirical results show that stock market return has a significant positive effect on green growth. However, urbanization harms green growth. This paper supplies important policyPolicy implications for green growth in emerging countriesEmerging countries.