Title Green financing: the role in ensuring sustainable economic growth in europe /
Translation of Title Žaliasis finansavimas: vaidmuo užtikrinant tvarų ekonomikos augimą Europoje.
Authors Dovidonis, Ignas
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Pages 86
Keywords [eng] green financing, sustainability, green bonds, DJSI, Dow Jones Sustainability Index, impulse response function, multi linear regression, sustainable economy growth, gross domestic product, final consumption expenditure, gross capital formation
Abstract [eng] Sustainability in nowadays world is a trending topic that attracts a lot of attention from various sources. Private sectors are sending capital to the money-making business without the decency to validate if the overall activity is unharmful to the environment by only aiming to increase profits hence the economy but the economy can be increased also by making sustainable investments. Acknowledging that, the sustainable financing absorbs more and more participants, therefore, increasing attention to this process is presenting the relevance of the topic and necessity to understand green investments impact to the overall economy growth. The problem derives whether the green financing and its instruments such as green bonds can be the perfect mediator between the economy growth and sustainability by channeling the funds towards the green investment projects and provide satisfactory results to the European economy which would ultimately attract more attention and investors. The goal of this research is to determine the impact on the sustainable economic growth from the green financing sector and establish its role and significance by incorporating the green bonds and Dow Jones Sustainability Index along with greenhouse gas emissions. The tasks were 1) Conduct the literature and information analysis to understand the importance of the green financing and its current research level in terms of participation in the economy growth of Europe; 2) Analyze the most used determinants that are used to reflect the economic growth in the literature research by other authors; 3) Research and analyze the most used analysis methods to understand the relationship and effect between green financing and economic factors and to select the most appropriate model for this paper; 4) Formulate the methodology of this research by establishing the variables and suitable analysis models that would support raised hypotheses; 5) Establish the green financing and economic growth regression models that would determine the significancy and impact level alongside test the stability and reliability of the created models. Research methods used in FMT: Literature and Statistical data analysis in literature part and multi-linear regression model by Ordinary Least Squares (OLS) powered with Impulse Response Function (IRF). The research results showed that in regression model by applied lag structure the green bonds are affecting gross capital formation and final consumption expenditure negatively, whereas the gross domestic product is affected positively. By analyzing the impulse response functions (IRF) it showed that green bonds negative effects are temporary and delayed. DJ Sustainability Index gave the opposite effect and contributed positively on gross capital formation and final consumption expenditure, by reviewing the IRF charts it contributed positively the GDP later on further periods showing significant delay in economy growth. Overall, the contribution of sustainability variables is minimal. The research showed that there is a participation in the sustainable economy growth from the green financing part, however the share of the overall growth is not very significant therefore by creating a gap for recommendations. The output of the research identifies that it necessitates more of the participation from the various stakeholders – public and private partnerships should get a signal to establish more attractive ways for natural, legal persons and underserved segments to contribute their capital towards sustainable projects and therefore increasing the economic growth in a greener and healthier way.
Dissertation Institution Vilniaus universitetas.
Type Master thesis
Language English
Publication date 2024