The Impact of Green Finance on Green Innovation Evidence From The Renewable Energy Sector of Pakistan

Abstract

This study examines the influence of green finance on green innovation within Pakistan's renewable energy sector, focusing on three critical factors: green finance availability, regulatory support, and environmental commitment. Addressing a significant gap in existing literature, the research explores the underexamined relationship between these factors in developing economies. Employing quantitative methods, data was collected through structured questionnaires from key industry stakeholders and analyzed using statistical tools, including multiple regression and ANOVA. The findings reveal that green finance is the primary driver of green innovation, providing essential resources for research and development as well as renewable energy investments. Regulatory support, while secondary, plays a crucial role in fostering a conducive environment for sustainable practices. Environmental commitment, an internal motivator, further promotes innovation. The study highlights a synergistic effect, where these factors collectively enhance green innovation. Practical recommendations include strengthening policies, introducing innovative financial instruments such as green bonds, and fostering organizational sustainability. The research contributes to theoretical frameworks, including the Resource-Based View and Innovation Diffusion Theory, by integrating financial, regulatory, and organizational perspectives. Offering actionable insights for policymakers, financial institutions, and businesses, the study underscores the importance of a unified approach to advancing green innovation while balancing environmental and economic objectives.