Green Finance and Economic Growth: A Literature Review

Green finance has emerged as a critical catalyst for driving economic innovation and facilitating the global transition toward carbon neutrality and sustainable economic development (Marín‐Rodríguez et al., 2024; Yadav & Chandiok, 2025). This literature review provides a systematic bibliometric analysis and qualitative meta-synthesis of scholarly work published between 2013 and 2023, following PRISMA 2020 guidelines to examine the causal links between green financial instruments to environmental and macroeconomic performance (Çıtak & Hoş, 2024; Olugbenga & Bali, 2026). The study categorizes existing research into three primary dimensions: the mechanism of green capital allocation, the efficacy of regulatory policy frameworks, and the differentiated regional impacts of financial innovation (Liu et al., 2025; Ma & Chen, 2025). Key findings highlight that while green credit and bonds effectively redirect capital toward climate-aligned projects, their success is heavily moderated by institutional quality and regulatory clarity (Ali et al., 2025). Furthermore, the integration of emerging technologies—such as artificial intelligence and block chain—is identified as a vital driver for enhancing transparency, risk assessment, and operational scalability within climate-finance ecosystems (Bagarti & Pahwa, 2025; Singh et al., 2025). Despite these advancements, significant barriers remain, including fragmented policy regulations, high transaction costs in emerging markets, and a persistent “instrument-impact paradox” caused by the lack of standardized environmental accounting metrics (Jamali & Voghouei, 2025; Raman et al., 2025). The review concludes that achieving a resilient global green finance architecture requires a shift toward interdisciplinary research, unified global reporting standards, and the active role of development banks in de-risking sustainable investments (Liu et al., 2025; Sheraz et al., 2021). Ultimately, these findings offer a policy-action roadmap to align financial incentives with long-term ecological sustainability and the United Nations Sustainable Development Goals (Majumdar et al., 2026; Olugbenga & Bali, 2026).