Assessing the relationship between Greenhouse Gases Emissions and Financial Risk: The role of Green Growth, Technological Innovation, Financial Inclusion, Renewable Energy, and Soft Infrastructure

Abstract

The concept of sustainable development has gained significant attention in recent years as societies face mounting environmental, social, and economic challenges. This thesis undertakes a comprehensive examination of sustainable development, aiming to understand its multifaceted dimensions and propose a roadmap for its achievement. The study begins by providing a theoretical foundation for sustainable development, exploring its origins, principles, and frameworks. It investigates the interconnectedness of environmental conservation, social equity, and economic prosperity, emphasizing the need for an integrated approach to address the complex issues at hand. The study basically follows two research models, dependent variable (greenhouse gas emissions) for model-1 and financial risk for the 2nd model. However, the independent variables which includes green growth, technology innovation, renewable energy, financial inclusion, and soft infrastructure. The methodology followed for this study is quantitative approach with secondary data ranges from 2004 to 2019. The data is collected from the World Development Indicators and the organization for Economic Cooperation and Development database. For the green growth the index is made with entropy weighted method to better represent the variable indicators. The diagnostic tests were used to solve the issue of panel data set which includes, correlation, VIF, cross sectional dependency, fixed random & Hausman, stationarity tests and cointegration. The diagnostic tests results suggested that appropriate method to follow for this panel is Fully Modified ordinary least square and Penal Dynamic ordinary least square. The findings Financial risk, financial inclusion and soft infrastructure are statistically significant and positive relationships with Green gases emission renewable energy technology innovation green growth significant negative relationship with greenhouse gases the long run variance is 66% and model greenhouse gases financial inclusion and soft infrastructure significant positive and green growth renewable energy and technology innovation significant negative relationship with financial risk long run variance is 55%. The results suggest that the government to give incentives to the institutions in the field of alternative energy to institutions should shift toward renewable energy and contribute to improving environmental quality. Government can develop policies and regulate the fund toward sustainable development, which can be helpful in environmental sustainability. Key Words: Renewable Energy, Financial Risk, Climate change, Sustainable development goal, Green growth, Environmental degradation