Can mineral resources be a blessing in disguise for green finance in G7 countries? Mineral resources for COP28 green financing goal

The rapidly evolving industrial and resource environments have improved the livelihood and economic performance of economies but create uncertainties for continuous environmental hazards. Due to the rising climatic issues and emissions levels, COP28 encourages countries to boost green financing initiatives, which undoubtedly reduce the use of carbon-intensive products. Despite the growing literature, limited attention has been paid to the influencing factors of green finance, which is a substantial research gap and could benefit scholars and regulators. To fill the gap, this research examines the group of seven (G7) economies over the period from 1990 to 2021, with emphasis on the role of mineral resources. For the empirical analysis, this study utilizes the panel autoregressive distributed lag (ARDL) model, while the fixed effect and random effect regressions with Driscoll-Kraay standard errors are used as robustness estimators. The empirical findings demonstrate that economic growth and green innovation are significant drivers of green finance. However, mineral resources (linear) and renewable energy are the leading barriers to green finance in the region. The results also confirmed the asymmetric influence of mineral resources as the linear term is adversely associated, while its impact transformed into positive when considered non-linear (quadratic) in the long run. From the ARDL estimates, the results show no importance in the short-run for the selected variables, while the long-run impacts are found consistent and significant by a series of robustness tests. Moreover, bidirectional causalities have been affirmed between mineral resources, green innovation, and green finance. This study recommends increased investment in green research and development projects, and strengthening of institutional qualities to transform the resource curse into blessings in the context of green finance.