The Nexus between Green Finance and Energy Consumption in Rcep Countries

Green finance has been valued and promoted by Regional Comprehensive Economic Partnership (RCEP) countries for its attribute of supporting green and sustainable development. However, the existing literature remains inadequate and widely divergent on the relationship between green finance and sustainable economic development. An in-depth understanding and empirical examination of the nexus between green finance development and fossil energy coinnsumption in the RCEP region is key to successful policymaking and sustainable development. This study constructs a green finance development index to investigate the relationship between green finance and the intensity of fossil energy consumption in RCEP countries using the full feasible generalized least-squares method (full FGLS) and the generalized method of moments (GMM) using panel data of ten RCEP countries from 2008 to 2020. The results demonstrate that the development of green finance can effectively reduce the intensity of fossil energy consumption. Furthermore, the study reveals that green finance has a more significant impact on reducing fossil energy consumption in countries with higher levels of financial development or lower levels of economic output. The empirical findings contribute to understanding the role of financial development in sustainable development strategies