The Impact of Financial Development and Green Financing on Economic Growth: An ARDL Estimation


  • Sana Gull, Tamsila Farid, Zunaira Maqsood Author


This research investigates the influence of financial development and green financing on Pakistan's economic growth. Financial development is assessed through two sub-dimensions: financial value added by manufacturing and financial value added by services. Additionally, population and education serve as control variables to assess their impact on economic growth. Data from 1990 to 2020 was utilized for analysis using EViews v10 in Time series. Statistical tests including descriptive statistics, F-bound cointegration tests, and ARDL models were employed to test hypotheses. Diagnostic tests were also conducted to ensure data clarity and generalizability. The findings reveal that financial development positively and significantly affects economic growth in both the short and long run. Moreover, green financing demonstrates a positive and significant impact on long-term economic growth but remains insignificant in the short term. Findings suggest that fostering financial development, and integrating green financing initiatives into economic policies can further bolster sustainable development efforts, aligning with global environmental goals. Policymakers can use these insights to design targeted strategies aimed at leveraging financial sector growth and sustainable financing practices to enhance Pakistan's economic resilience and prosperity. Nevertheless, this study is limited by its focus solely on Pakistan, with only 31 yearly observations. Future research could enhance the study's applicability by utilizing panel data from various countries.




How to Cite

The Impact of Financial Development and Green Financing on Economic Growth: An ARDL Estimation. (2023). Sustainable Trends and Business Research, 1(2).