What question did this study set out to answer?

This paper aims to examine green finance as a framework and analyze its main instruments, focusing on their role in sustainability.

March 31, 2026Open Access

Evaluation of Green Finance and Its Types of Instruments, Including Green Bonds, Green Loans and Green Equity: A Conceptual Review Paper

Key Points

This paper aims to examine green finance as a framework and analyze its main instruments, focusing on their role in sustainability.
Conducted a systematic literature review from academic journals and finance organizations between 2016 to 2026.
Identified trends and key ideas in the literature related to green finance.
Evaluated the impact of green financial instruments on promoting green investments.
Green bonds are the most widely used green finance instrument due to their established structure.
Green loans are gaining popularity, especially with flexible financing linked to environmental criteria.
Green equity and venture capital are noted as emerging but less studied funding sources for sustainability.
Challenges include lack of standardization, awareness, and uneven growth rates in different regions.

Abstract

Green finance is becoming an important tool to foster sustainable development and to combat climate change․ This conceptual review paper intends to introduce the green finance as a framework and to analyze its main financial instruments: the green bond‚ the green loan‚ and the green equity․ This paper is based on systematic literature published in academic journals‚ universities and global and regional finance organizations in the period of 2016 to 2026‚ to present the literature's main ideas to identify its trends‚ and to evaluate the green financial tools' role in promoting the green investment․ In terms of preferences‚ green bonds remain the most common green finance instrument‚ as their structure is already well-known and established with investors․ Green loans are also gaining traction via flexible financing arrangements tied to environmental performance criteria․ Other fundraising methods like green equity and venture capital are less studied‚ but also potential sources for funding innovation and longer-term sustainability․ Other challenges include lack of standardization‚ lack of awareness and uneven market growth rates in countries like India․ Ultimately‚ it also lists recommendations for regulatory support‚ transparency and additional work at the instrument level․

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