The purpose of this study is to analyse the criticality of financial sector development (FD) on green energy (GE) financing for sustainable industrialisation (IND) in developing countries.
The study uses a panel series of 139 developing countries between 1991 and 2024. The countries are disaggregated into low, middle and high-income groups and full samples. The novel two-step-system generalised moment method and fully modified ordinary least squares technique were applied for data analysis.
Result shows that FD retard green energy in the low-income group, while it strongly enhances GE in middle, high-income groups and the full sample. However, for all income groups, GE positively affects IND. Similarly, the interactive effect of FD and GE promotes IND across all income groups and the full sample.
The study used data from 139 countries, each with peculiar geopolitical and country-specific characteristics. The findings from the study may marginally deviate from country-specific conditions. Also, the study did not accommodate the ongoing Middle East conflict, which could have shaped GE and economic stability in most developing countries. Nevertheless, the study’s findings are solid and resonate with the literature.
Financing GE in developing countries is challenged by inadequate funding and funding channels. Attaining sustainable energy access and economic prosperity requires a huge investment in GE. As a result, the study considers the criticality of FD for green financing to drive sustainable industrialisation in developing nations. No study has interacted FD and GE to support IND in developing countries. Hence, the study contributes to attaining sustainable development goals 7, 13 and 8.
