Regulating Green Finance for Sustainable Development: The Moderating Role of Government Regulations
Contributors
- Muhammad Azam PhD Scholar, National College of Business Administration & Economics (Alhamra University), Sub Campus Multan, Pakistan.
- Dr. Adeel Akhtar Assistant Professor, Department of Commerce, Bahauddin Zakariya University, Punjab, Pakistan.
Abstract
Green finance has become an important tool for channeling financial resources into green investment and promoting sustainable development. However, its impact may depend on the regulatory regime in which financial institutions and investors operate. This study examines the relationship between green finance and sustainable development and explores the moderating role of government regulations. Green finance includes green investment, green credit, green bonds, climate finance, and renewable-energy financing, while sustainable development is defined through four principles: economic, environmental, social, and resource sustainability. Government regulations comprise environmental regulations, climate policies, regulatory enforcement, green-finance standards, and policy support. The study employs a quantitative approach using secondary panel data and examines the proposed relationships through panel-data regression with an interaction term. The empirical analysis of 180 country-year observations shows that green finance is positively and statistically significantly related to sustainable development (β = 0.421, p < 0.001). Government regulations also demonstrate a positive and statistically significant relationship with sustainable development (β = 0.176, p = 0.001), indicating that stronger regulations enhance the positive relationship between green finance and sustainable development. Simple-slope analysis further reveals that the impact of green finance strengthens as government regulations increase, with β = 0.242 under low regulatory conditions and β = 0.394 under high regulatory conditions. The study emphasizes the need to integrate green finance with effective regulatory frameworks, standardized green-finance practices, monitoring, enforcement, and supportive environmental policies. These findings advance the literature on sustainable finance by highlighting government regulations as an institutional factor influencing the relationship between green finance and sustainable development.
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Corresponding Author
Muhammad Azam
PhD Scholar, National College of Business Administration & Economics (Alhamra University), Sub Campus Multan, Pakistan.
Corresponding Author: [email protected]
