Financial development and green technological innovation: a case of GCC countries

Abstract

Purpose The purpose of this study is to check the impact of financial development on green technological innovation (GTI). Design/methodology/approach The sample size includes the 20-year (2001–2020) financial statistics of six Gulf Cooperation Council (GCC) region countries. To check the proposed relationship, this research uses a series of econometric models including fixed effect, fully modified ordinary least square and robust least square models. Findings The statistical results imply that financial sector development has a direct significant impact on GTI. A developed financial sector can uplift green technological development by offering more loans to industrial sectors and the import of modern technology. The statistical analysis further reveals the positive impact of gross domestic product (GDP), foreign direct investment inflow and trade volume while the negative impact of resources contribution on GTI. Practical implications The findings suggest key policy suggestions regarding the role of the financial sector in promoting GTI in the GCC region. Originality/value The novelty of this study lies in its examination of the relationship between FD and GTI in the GCC countries, a region with its unique economic and environmental dynamics.