Do green finance and health expenditures lessen the ecological footprint to ensure sustainable development?

Abstract

Green finance influences both health expenditures and environmental quality. Focussing on SDGs 3, 7, and 8, this study investigates the nexus between ecological footprint, green finance, health expenditures, renewable energy consumption, and economic growth using data from 2000 Q₁-2020 Q₄. Moreover, this study also explores the interaction effect of green finance and health expenditures in the ecological footprint function by employing the novel Fourier approximation techniques. The series integration order is investigated using the Fourier ADF and Fourier GLS unit root test. The study applies the bounds test and residual augmented least squares cointegration technique (RALS) for investigating the long-run nexus. Both tests provide mutual reinforcement for each other's results. The long-run elasticity is identified using the ARDL model. The findings show a negative and significant impact of green finance, economic growth, and renewable energy consumption on ecological footprint. Further, the interaction between green finance and health expenditures has a negative impact on environmental quality. Moreover, the causal interactions suggest that green finance enhances the quality of the environment, which is one of the objectives in line with both SDGs 3 and 7. This further suggests that adopting green practices can create a clean environment and thus improve environmental quality.