The Integration of green finance and financial development as a mechanism for achieving sustainable industrial growth: An econometric analysis of BRICS economies using FMOLS, DOL and PCSE models

Benazza Hicham; Belarbi Abdelkader; Cadi Mohammed; Boumedini Mohamed Amine; Benhamida Mohamed

doi:10.15637/jlecon.3163

Authors

Benazza Hicham University of Naama / Algeria 0009-0001-0135-7189
Belarbi Abdelkader University of Saida Dr Moulay Tahar / Algeria 0000-0001-5026-8759
Cadi Mohammed University of Naama / Algeria 0009-0009-9887-5414
Boumedini Mohamed Amine University of Tlemcen / Algeria 0009-0003-2483-9337
Benhamida Mohamed University of Saida Dr Moulay Tahar / Algeria 0000-0003-1935-0716

10.15637/jlecon.3163

Abstract

Purpose: This study aims to examine whether the integration of green finance and financial development serves as an effective mechanism for achieving sustainable industrial growth in BRICS economies. Method: The research employs a quantitative econometric approach using panel data for BRICS countries. Long-run relationships are estimated through Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Panel-Corrected Standard Errors (PCSE) models to account for heterogeneity and cross-sectional dependence. Findings: The results reveal a statistically significant and positive long-run relationship between green finance, financial development, and sustainable industrial growth. While individual effects may vary, the interaction between green finance and financial development demonstrates a strong synergistic impact. Empirical evidence suggests that this integration plays a substantial role in supporting industrial expansion, with effects particularly pronounced at lower levels of green finance development. Conclusion/Contribution: The study contributes to the literature by highlighting the importance of integrating green finance with financial development as a driver of sustainable industrialization in emerging economies. It provides empirical support for policy frameworks that enhance coordinated financial-environmental strategies, emphasizing the role of institutions such as the New Development Bank in strengthening South–South cooperation and supporting long-term sustainability goals.

Keywords:

BRICS Industrial Growth Green Finance Financial Development Synergic Influence

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