JEL classification: O16, O44, Q01, Q50, Q56;
Keywords: Green Finance, Index, CO2, GDP;
Abstract: Ensuring sustainable economic and environmental development and preventing environmental degradation are important issues that need to be achieved globally. Reaching the objectives pertaining to economic and climatic policies, such as switching to alternative, creative, and green sources for the production of energy, goods, and services, developing a low-carbon production infrastructure, ultimately decarbonizing all sectors, and developing financial resources for all of these, is even more crucial. Through green technology innovation and the effective use of green financing tools, CO2 emissions can be reduced, and economic development can promote sustainability through these methods. In this context, it is necessary to understand the interaction mechanisms of green finance and its outputs with economic and environmental factors. Studies examining how green investment, growth indicators, and CO2 emissions affect each other will provide important scientific contributions in terms of both understanding the effects of existing approaches and developing new and effective policies, and raising awareness on green finance. For all these reasons, this study aims to reveal how GFI affects CO2 emissions and GDP, how CO2 emissions affect GFI and GDP, and how GDP affects GFI and CO2 emissions. GFI, CO2 emissions, and GDP variables covering 26 countries between 2018-2021 were analyzed using panel data analysis with a fixed effects model. Firstly, it is found that CO2 emission had a negative effect on GFI, but GDP had a positive effect on GFI, and the effect of CO2 was greater than GDP.