Can Green Technological Innovation Offset the Environmental Costs of Finance? Insights from OECD Countries

Authors

https://doi.org/10.48313/iee.v1i2.46

Abstract

Advancing ecological sustainability while limiting the harm caused by ecological degradation has emerged as a shared international priority. Moreover, the degree to which specific OECD countries can curb ongoing ecological decline is still not well understood. The present study investigates the interplay among economic growth, Green Technological Innovation (GTI), Financial Development (FD), and Ecological Policy Stringency (EPS), with particular attention to the moderating role of GTI in shaping ecological outcomes. The paper evaluated these dynamic links using panel data from 1990 to 2022 within the frameworks of Environmental Kuznets Curve (EKC) and Load Capacity Curve (LCC) hypotheses. To address this inquiry, the analysis applied the novel Method of Moments Quantile Regression (MMQR). The research outcome disclosed that FD consistently contributes to ecological deterioration across the distribution of environmental outcomes. GTI and EPS exert a uniformly beneficial effect on ecological quality, with stronger improvements observed in higher-degradation regimes. Additionally, the results provide strong evidence for the EKC and LCC hypotheses. More importantly, the interaction term between GTI and FD indicates green innovation mitigates the environmental pressures induced by FD and enhances the capacity of financial systems to support environmental quality. The findings offer actionable insights for policymakers in OECD economies, highlighting that fostering green innovation within financial systems can effectively curb ecological degradation.

Keywords:

Ecological sustainability, Green technological innovation, Financial development, Economic growth

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Published

2025-06-14

Issue

Vol. 1 No. 2 (2025): Innovations in Environmental Economics (IEE)

Section

Articles

How to Cite

Can Green Technological Innovation Offset the Environmental Costs of Finance? Insights from OECD Countries. (2025). Innovations in Environmental Economics , 1(2). https://doi.org/10.48313/iee.v1i2.46

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