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Exploring the Nexus Between Green Finance and Poverty Reduction in Nigeria

Ugwu, Paul Ede, Odili, Okwuchukwu, Ezeudu, Ikenna Jude

Abstract

This study investigates the nexus between green finance and poverty reduction in Nigeria, a critical inquiry given the country’s dual challenges of environmental degradation and persistent poverty. Maximum Likelihood Estimation was employed on Autoregressive Distributed Lag model to analyse the data, the study analyzes the impact of key green finance instruments namely green bond issuance, green credit provision, green insurance, and renewable energy production on the poverty headcount index. Additionally, the study examines the moderating role of greenhouse gas emissions and regulatory quality on this relationship. The findings reveal that green bond and greenhouse gas emissions exerted positive and significant impact on poverty reduction in Nigeria. Green credit, renewable energy production and regulatory quality had negative and significant impact on poverty, while, green insurance had negative and insignificant impact on poverty. This implies that green finance significantly contributes to poverty alleviation by mobilizing sustainable investments, enhancing energy access, and mitigating environmental risks. The study further establishes that reductions in greenhouse gas emissions amplify the poverty reducing effects of green finance, while regulatory frameworks diminished it. These results underscore the importance of integrating environmental sustainability and institutional quality within financial policies to foster inclusive development, and offers actionable insights for policymakers, financial institutions, and development practitioners committed to achieving sustainable poverty reduction.

Keywords

Green financePoverty reductionRegulatory qualitySustainable developmentEnvironmental finance Jel Classification: H23I32O16Q56

References

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