Contribution of green bonds and green growth in clean energy capacity under the moderating role of political stability

The current study proposes links between green bonds, green growth, and clean energy capacity under the moderating effect of political stability for the top 25 green bond-issuing countries. The data between 2014 and 2021 is analyzed using instrumental variable GMM (IV-GMM) and Driscoll and Kraay (D&K) approaches. The results from IV-GMM indicated that a one per cent rise in green bonds drives clean energy capacity by 0.350 % [0.029 % with D&K]. Likewise, the outcomes show an incremental response of 0.398 % [0.008 % with D&K] on clean energy capacity with a one per cent increase in green growth for chosen countries. Regarding the moderating relationship, the outcomes proved that political stability is conducive to enhancing the relationship between green bonds-clean energy capacity [0.116 %] and green growth-clean energy capacity [0.452 %] for the selected countries. The results from changing the green finance variable and estimations with different approaches [Fully modified-OLS and Quantile regression] further authenticated the results. Based on these connections, we propose policymakers design integrated policies on green finance and growth to boost renewable energy infrastructure, ensuring a stable political system to attract investors for enduring green energy progress.