Effects of green finance, economic growth,renewable energy consumption and foreign directinvestments on ecological footprint: the case of E – 7countries

In the thesis study, the main purpose is to investigate the effect of green finance on the ecological footprint using the panel data analysis method, using the annual data of the E-7 countries between the period 2000-2020. An econometric model was established to determine the impact of green finance, renewable energy consumption, foreign direct investments and real income on the ecological footprint for E-7 countries. Ecological footprint was added to the model as the dependent variable, and Green Finance, renewable energy consumption, real income and foreign direct investments were added to the model as independent variables. In the econometric analysis conducted in the study, the existence of cross-sectional dependence was first tested and the Cross-sectionally augmented IPS (CIPS) unit root test was preferred, considering the stationarity of the series. Long- and short-term forecasts were made using the Pooled Mean Group/Lag Distributed Autoregressive Boundary Test (PMG/ARDL) estimator. Finally, the causality relationship between the variables was tested by applying the Dumitrescu Hurlin Panel Causality test. According to the PMG-ARDL estimation results, it was concluded that a 1% increase in green finance in the long term in E-7 countries reduces the ecological footprint by 0,005. At the same time, it has been observed that renewable energy increases environmental sustainability by 0,327 in the long term. In the study where the environmental Kuznets curve was tested, a 1% increase in real income in the long run increased the ecological footprint by 9,848%, while the square of real income; It has been observed that a 1% increase in the long term reduces the ecological footprint by 0,409. This confirms the validity of the environmental Kuznets curve. In the study, according to the Dumitrescu Hurlin Panel Causality test results, it was determined that there was a one-way causality relationship between the ecological footprint and green finance, from the ecological footprint to green finance, while there was a one-way causality relationship between real income and its square and ecological footprint, from real income and the square of real income to the ecological footprint. It has been observed that there is a causal relationship. Additionally, it has been found that there is a bidirectional causal relationship between renewable energy and ecological footprint. At the same time, it has been determined that there is a one-way causality relationship between the foreign direct investments added to the model as a control variable and the ecological footprint, from the ecological footprint to the foreign direct investments. There are a limited number of studies examining the impact of green finance on ecological footprint in the literature. In this study, the importance of green energy use for environmental sustainability was revealed by testing green finance, renewable energy consumption and the environmental Kuznets curve hypothesis in a sample of developing countries. Our analysis results have determined that E-7 countries need to attach importance to renewable energy and accelerate investments in this regard in order to reach the carbon zero target. The findings of our study are important for policy makers of E-7 countries in achieving the goal of increasing renewable energy investments, which is one of the most important agenda items of the Conference of the Parties. It is thought that our study will contribute significantly to the literature by using current data and applying the current econometric approach. In addition, the data used in this study can be repeated with different econometric approaches, different country samples and various environmental indicators.