Effects of green finance and financial innovation on environmental quality: new empirical evidence fromAfrica’s countries

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides empirical evidence from an understudied region on the dynamic effects of green finance and financial innovation on emissions, using a method that accounts for cross-sectional dependence.

🏢実務担当者:Highlights the importance of green finance mechanisms for immediate and long-term emission reductions, offering insights for financial institutions structuring green products in emerging markets.

🏛政策担当者:Recommends strengthening green finance frameworks and setting renewable energy targets, which can inform policy design for sustainable finance in developing countries.

This study examines the role of financial innovation and green finance in improving environmental quality in Africa. Given the continent’s rapid economic growth and rising energy demand, environmental degradation has intensified, yet the financial sector’s potential contribution to sustainability remains underexplored. The analysis covers 35 African countries over the period 2000–2019. The cross-sectionally augmented autoregressive distributed lag model is employed to capture both short- and long-run dynamics while accounting for cross-sectional dependence. Disaggregated data on renewable energy projects are used to provide more accurate insights. The results indicate that financial innovation and green finance significantly reduce carbon dioxide emissions in the long run. In addition, green finance has an immediate short-term mitigating effect on emissions, highlighting its dual role in both immediate and sustained environmental improvement. The study is limited to available data up to 2019 and may not fully capture postpandemic financial–environmental dynamics. The findings suggest that policymakers should strengthen green finance frameworks, set renewable energy investment targets and enhance climate risk disclosure to ensure sustainable finance practices. By promoting finance-driven mechanisms for sustainability, this research supports the achievement of several Sustainable Development Goals, particularly those related to clean energy, climate action and sustainable growth. This study contributes to the literature by filling a regional gap in green finance and environmental sustainability in Africa. It emphasizes the dynamic environmental effects of financial innovation under different regulatory frameworks and integrates the analysis with renewable energy project financing.

• semanticscholar https://doi.org/10.1108/jfra-04-2025-0315first seen 2026-07-02 06:23:26