The Impact of Green Finance on Enhancing Economic Growth and Energy Transition in Algeria: An Econometric Analysis Using the ARDL Model for the Period (1990–2023)

Abstract

This study investigates the relationship between green finance, economic growth, renewable energy, and carbon emissions in Algeria during the period 1990–2023. Using a structural break–adjusted ARDL model, the analysis examines both short- and long-run dynamics while accounting for major economic shocks. The results reveal a stable long-run relationship among the variables. Green finance significantly promotes economic growth and renewable energy deployment while contributing to the reduction of CO₂ emissions. The findings highlight the strategic role of green finance in supporting sustainable growth and facilitating the energy transition in hydrocarbon-dependent economies such as Algeria. Results: The findings confirm the existence of long-run cointegration among the variables. In the long term, green finance significantly contributes to economic expansion, enhances renewable energy deployment, and reduces carbon emissions. The error correction model indicates that approximately 55% of short-run disequilibria are corrected each year. Causality analysis reveals that green finance drives both economic growth and renewable energy adoption, while GDP growth exerts upward pressure on CO₂ emissions.