The Nexus between Financial Regulation and Green Sustainable Economy

Following the international financial trend, several countries launched comprehensive and coordinated financial system reform programs to reach green sustainable economy. These reforms have included significant adjustments in financial regulation and supervision policies designed precisely to stimulate the improvement in the performance of green economy. This paper explores the literature regarding the importance of financial regulation and the state of green sustainable economy as a first objective. The second objective is to develop a linear regression model for empirically understanding how the financial regulation can affect green sustainable economy and apply it for 25 European Union countries, over the period of time 2000-2018, covering pre-crisis, crisis, and post-crisis period. Our findings support the idea that coherent financial regulation framework determines green economy to be growth-friendly and sustainable. The paper can be considered a useful viewpoint in understanding the complex relationship between regulation and green sustainable economy, thus adding to existing literature.