Impact Of Green Bonds, Green Loans And Green Risk Insurance On Nigeria’s Economic Growth Using An ARDL Bounds Testing Approach

This study evaluates the contributions of green bonds, green loans and green risk insurance to economic growth in Nigeria over the period 2005–2022. Building on the environmental finance literature, we employ the autoregressive distributed lag (ARDL) bounds testing procedure to capture both short-run dynamics and longrun equilibrium relationships among the selected green finance instruments and real gross domestic product. Diagnostic tests confirm the absence of serial correlation, heteroskedasticity and functional misspecification, while stability of the estimated coefficients is established via cumulative sum (CUSUM) tests. Empirical findings reveal that in the long run, green bond issuance and green loan disbursements exert a positive and statistically significant effect on GDP growth, with elasticities of 0.23 and 0.17, respectively. Green risk insurance contributions also display a positive long-run association, albeit at a lower magnitude (elasticity of 0.09). In the short run, adjustments toward equilibrium occur at a speed of 42 percent per annum, and green bonds immediately stimulate growth, whereas green loans and insurance manifest more gradual effects. Policy simulations underscore that a 10 percent increase in green bond volumes can accelerate GDP growth by approximately 2.3 percent over a five-year horizon. The study concludes that strengthening Nigeria’s green finance architecture—through regulatory incentives for bond market development, enhanced credit guarantees for environmentally sustainable projects and the expansion of risk insurance schemes—can foster a more resilient and inclusive growth trajectory. Implications for policymakers and financial regulators center on the design of tailored fiscal and monetary instruments to mobilize private capital toward a low-carbon transition