Exploring the Impact of Green Finance and Green Innovation on Resource Efficiency: The Mediating Role of Market Regulations and Environmental Regulations

Green finance, innovation, and resource efficiency have gained significant traction recently, particularly in resource-rich countries. This study investigates the role of green finance and innovation in resource efficiency with the mediating lens of environmental regulations and market rules. The study employs a structural equation model on a panel of 15 resource-rich countries from 1995 to 2023. The findings illustrate a complicated interplay between the variables. First, the findings show that green financing positively and negatively affects resource efficiency. In contrast, green innovation constantly improves resource efficiency. Market rules have a favorable impact on resource efficiency. Environmental laws, however, hurt resource efficiency. Furthermore, the study reveals that green financing favors market regulations, implying that financial expenditures in green initiatives might strengthen regulatory frameworks that promote market efficiency. In contrast, green finance harms environmental rules, and green innovation harms both market and environmental regulations. In addition, we divided the sample into developed and developing nations and offered a sub-group analysis to take into consideration the variations in the degree of national development and green advances to further improve the analysis. Overall, the study emphasizes the multifaceted role of green finance and innovation in increasing resource efficiency within regulatory frameworks. These findings are critical for policymakers and stakeholders in resource-rich countries seeking to reconcile economic growth with sustainable development.