Greening the Future: A Mediation Analysis of Green Technology Innovation on the Relationship between Green Finance, Environmental Regulations, and Ecological Footprint

Abstract

The increased urgency to address worldwide environmental problems has emphasized the importance of understanding the factors that determine one’s ecological footprints. The present study investigates the complex relationship between green finance, environmental regulation, and its effect on the ecological footprint. The research then further examines the mediation effect of green technology innovation on these relationships. This paper uses structural equation modeling SEM analysis of data coming from the 81 countries in a time period from 2001 to year 2022. The findings of the study present valuable information about the potential influence that financial and governmental tools may have on environmental sustainability. The impact of green finance and stringent environmental regulation in cutting down its ecological footprint as revealed by the results, asserting the key roles that both elements have. Furthermore, the green technology development provided not only the means to lessen these advancements’ adverse effects on nature but also assistance in controlling the impact of environmental regulations and green finance. Moreover, the study considers control factors such as income inequality, economic growth, unemployment and life expectancy to ensure a comprehensive analysis. The results also show that the development of green financial systems, development, and implementation of sound environment related regulations to resolve challenges in areas like water and soil pollution as well as technological advancements play significant roles in achieving sustainable growth. This translates into meaningful guidance for policymakers looking to integrate financial, regulatory, and technological efforts in a way that reduces environmental harm, while also furthering ecological sustainability. In the future, these processes should be further studied in a variety of contexts and for longer periods to gain a better understanding of sustainable development pathways.