The Path to Zero-Carbon: Analyzing How Green Finance and Financial Innovation Impact Environmental Performance: Analysis of Four Asian Developing Economies

Abstract

Carbon neutrality is an international agenda that must be accomplished in the framework of the COP requirements. To go beyond the metrics of traditional investment orientation, this paper explores how the output of clean energy, sustainable finance, eco-regulations, and financial innovation affects the possibility of the four developing Asian economies becoming carbon-neutral between 2010 and 2021. The study confirms the Environmental Kuznets Curve (EKC) theory, through the prism of zero-carbon objectives, using panel unit root and validates mean group tests. Results indicate that the production of clean energy on a large scale can tremendously lower the rate of carbon emissions. Moreover, eco-regulations, green finance, and financial innovation also increase national abilities to achieve zero-carbon goals, reduce the risks in the sector, and create sustainable environments. This study offers practical recommendations and abstract implications to policymakers who switch to a carbon-neutral society by pointing out the transformation of energy inputs to quantifiable clean outputs.