Is there any recovery power for economic growth from green finance? Evidence from OECD member countries

Abstract

This paper investigates the dynamic interactions between green finance, economic growth, and green energy consumption for the Organization of Economic Cooperation and Development (OECD) members. The econometric analysis is conducted on annual data gathered throughout 2010–2020 using different estimation techniques of the Vector Autoregressive model, causality, and co-integration approaches. The main results confirmed a positive bi-directional relationship between GDP and green energy consumption. In addition, there is a two-way relationship between the volume of green bond issuance and the use of green energy in OECD countries. The recommended practical policy recommendations are establishing a unified green bonds market among OECD member states, prioritizing green projects to support the issued green bonds, improving the financial system, and financing rural electrification and electric vehicle transition by green bonds.