Green Finance as a Catalyst for Sustainable Economic Growth in Emerging Market Economies: An Analytical Investigation of Key Drivers

This article empirically examines the key determinants of green finance for sustainable economic development among 40 EMEs, with regulatory quality and technological advancement identified as mediating drivers. Drawing on the Green Solow theoretical framework and Generalized Linear Model, this paper systematically analyzes the significant impact of green finance on SDGs, imperatively SDGs 8, 9, 12, and 13, where economic benefits as well as trade-off outcomes are established. Findings indicate that while green finance enhances production capacity and ecological sustainability, it constrains GDP and employment in the short term, necessitating adaptive policy measures. Regulatory quality strengthens the positive effects of green finance but introduces employment trade-offs, whereas technological advancement accelerates sustainability yet disrupts labor markets, thereby reinforcing the automation challenge. Regional variations highlight Asia’s high-carbon growth trajectory, the effectiveness of green investment in Eastern Europe, and the need for stronger regulatory and financial institutions in Latin America and the Middle East and Africa. Policy suggestions include emphasizing stringent carbon controls, targeting incentives for renewable energy investment, introducing transition jobs schemes, and embarking on region-specific governance changes in order to enhance the impact of green finance. The report advocates striking a balance between economic development and green sustainability in support of a deliberate, policy-oriented process to ensure that green finance is the driving force for sustainable, resilient, and long-term economic growth across EMEs.