Green Finance Impact on Economic Growth: A Panel data Analysis

Abstract

The Green finance is and what the things are that contribute to it. To summarize, the Greenhouse Effect is a process that allows the Earth to retain heat. This allows Earth to still be warm while not facing the sun, and not be too warm while facing it. While the Greenhouse Effect is good in a basic sense, too much volume of greenhouse gases in the atmosphere may cause temperatures to rise, which has been a trend in recent years. While without the greenhouse effect the Earth would experience major temperature swings, too much of the Greenhouse effect would also be bad, because the Earth would be too hot. It is a delicate balance which needs to be maintained on Earth if we wish to inhabit it in centuries to come.An import- driven energy policy is not sustainable for Pakistan. Besides being a drain on its foreign exchange reserves, it exposes the economy to international energy price shocks, putting the entire economy at risk. A green-energy-based energy policy can help Pakistan meet its energy requirements while reducing its dependence on imports and hence reduce the cost of energy to the country. We describe how the regulations and the structure of the power market support the financial viability of renewable energy in Pakistan and enable easy access to financing. The one-buyer, take-or-pay model of power purchase ensures that any new power project that may produce expensive power but provides other benefits like clean energy or an improvement in the balance of payments (use of local fuel instead of imported fuel) can be financially viable provided the government approves the project.[1] However, the increased financial viability and bank ability come at the cost of higher energy prices to consumers due to low operational efficiencies and a higher subsidy burden on the government. We also discuss the challenges faced by distributed renewable energy projects (like home rooftop solar energy solutions) since they do not benefit from the same one-buyer, take-or-pay support. However, alternative schemes like subsidized financing can help increase the penetration of this source of energy

This study has focused mainly on investigating the relationship between Green finance and economic growth in Pakistan. This study has considered in this study Green finance, GDP per capita, expenditure per capita and research and development are considered as independent variables. GDP is considered as the dependent variable. This study has finalized from 100 firms data to testify the relationship between variables mentioned above. Secondary source is used for data collection regarding study variables from the period of 2002 – 2021 (20 years) from the official website WDI. A sample of two countries India and Pakistan’s observations is finalized for Green finance. Collected data is then analyzed through statistical instruments such as correlation and regression by using E view software. Based on the findings, it is concluded that Green finance , GDP per capita, expenditure per capita and research and development has significant impact on economic growth of Pakistan  Findings of this

Study have proved that change in Green finance brings a definite change in economic growth of Pakistan.