ROLE OF ECONOMIC INDICATORS WITH ENHANCING GREEN FINANCE AND TECHNOLOGY INNOVATIONS FOR SUSTAINABLE DEVELOPMENT AND ENERGY EFFICIENCY WITH MEDIATION OF GOVERNANCE

Abstract

In recent years the most dangerous threat to human existence is climate change and its effects across the globe. Global warming rises in sea levels, hurricanes, and forest fires are just a few examples of the severe weather changes and aberrant climatic occurrences that pose a growing threat to the stability of our energy infrastructure and the smooth functioning of our societies. The world is facing the problems of climate change with massive disasters in developing and underdeveloped countries across the globe. Identified in previous studies that a key challenge in the fight against environmental degradation is energy efficiency. By enhancing green energy projects and absorbing funds to carry out knowledge conversion in energy efficiency, green financing may contribute to improving energy efficiency. Considering environmental degradation such as climate change and global warming, the time has come to scientifically investigate these challenges. In this regard this study is addressing the problems regarding climate change policies including economic and social factors of the regions with special reference to green finance. This study's major aim is to examine the role of economic and financial factors with special reference to green finance and technology innovation in energy-efficient economies. Quantitative method is applied on Secondary data to achieve desire results. The study data range is from 2003-2019, relied upon the availability of the data of main variables. The data is collected from world development indicators, world governance indicators and OECD data base. The data has been organized in excel and then imported to the STATA-17 for further analysis. This research considers the major role of governance as a mediator. The entropy-weighted method is introduced to make an index for the six governance indicators related to environmental study. However, this study explored the relation between technology innovation, green finance, trade openness, infrastructure, economic growth and FDI. The research models have four control variables including industrialization, urbanization, population growth and literacy level. A total of 111 countries data has been organized across the globe for analysis based on the availability of data. The study includes two theoretical frameworks, in model-1 the dependent variables is green house gases emission (sustainable development) with governance as mediator and FMOLS is applied for estimation. The study findings suggests that green finance and technology innovations have significantly negative effect on GHGs. However, trade openness, infrastructure, economic growth, and FDI have significantly positive affect on GHGs. With the inclusion of mediator the results are more significant, suggesting that governance plays an important role while enhancing these factors. In model-2 the energy efficiency is dependent variable with same independent variables and the GMMS estimation method is applied. Although, Model-2 includes the conditional effect of financial risk. Green finance and technology innovation increases energy efficiency and other variables reduces efficiency. The transformation mechanism is applied to measure the mediation and conditional moderation of financial risk. The interaction term of green finance with financial risk has an effect on governance. All other variables significance level improves with interaction term with financial risk. Overall this study suggests that green finance and technology innovation with governance can play a vital role in combating the issue of climate change. Keywords: Green finance, sustainable development, economic growth, technology innovation, environmental degradation, climate change