Green finance and ecological outcomes: a quantile approach to biodiversity and carbon emissions in OECD countries

Khan, Muhammad Ibrahim and Rahman, Sami Ur and Hussain, Javed G. (2025) Green finance and ecological outcomes: a quantile approach to biodiversity and carbon emissions in OECD countries. Journal of Economic Studies. pp. 1-21. ISSN 0144-3585

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Abstract

Purpose

This study examined the combined impact of green finance, innovation, taxes and environmental policy stringency on environmental and ecological dynamics for the Organisation for Economic Co-operation and Development (OECD) countries using data from 1994 to 2020.

Design/methodology/approach

The study employed advanced econometric techniques, including cross-sectionally augmented Dickey-Fuller, cross-sectionally augmented Im, Pesaran and Shin, Westerlund (2007) cointegration, Methods of Moment Quantile Regression and Dumitrescu and Hurlin (2012) panel causality test.

Findings

The empirical evidence established a heterogeneous impact of green finance across quantiles, with a negative impact on biodiversity loss and a positive impact on consumption-based carbon emissions and biocapacity. Moreover, green taxes and policy stringency decrease biodiversity loss and carbon emissions. A bidirectional causality is identified between CO2 and biodiversity.

Practical implications

The results advocate targeted financial policies, driven by technological innovation, to improve the capability of OECD countries in mitigating emissions and preserving biodiversity.

Originality/value

This unique study contributes to existing literature by considering the impact of green finance, innovation and policy tools on both environmental and ecological dynamics (both biodiversity loss and biocapacity) across different quantiles.

Item Type:	Article
Identification Number:	10.1108/JES-06-2025-0408
Dates:	Date Event 24 November 2025 Accepted 23 December 2025 Published Online
Uncontrolled Keywords:	Green finance, Biodiversity, Biocapacity, Green taxes, OECD, MMQR
Subjects:	CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance
Divisions:	Business School > Accountancy, Finance and Economics
Depositing User:	Gemma Tonks
Date Deposited:	19 Jan 2026 10:58
Last Modified:	19 Jan 2026 10:58
URI:	https://www.open-access.bcu.ac.uk/id/eprint/16815

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