The Impact of Stability on Green Growth: Empirical Evidence from European Union Countries
By: Bertaç Şakir Şahin and Sabri Burak Arzova

References
- Adebayo, T. S. (2022). Renewable Energy Consumption and Environmental Sustainability in Canada: Does Political Stability Make a Difference? Environmental Science and Pollution Research, 29(40), 61307–6132.
https://doi.org/10.1007/s11356-022-20008-4 - Agheli, L., & Taghvaee, V. M. (2022). Political Stability Effect on Environment and Weak Sustainability in Asian Countries. Sustainability Analytics and Modeling, 2, 100007.
https://doi.org/10.1016/j.samod.2022.100007 - Al-Zubairi, A., AL-Akheli, A., & Elfarra, B. (2025). The Impact of Financial Development, Renewable Energy and Political Stability on Carbon Emissions: Sustainable Development Prospective for Arab Economies. Environment, Development and Sustainability, 27(7), 15251–15273.
https://doi.org/10.1007/s10668-024-04703-5 - Apergis, N., & Payne, J. E. (2014). Renewable Energy, Output, CO2 Emissions, and Fossil Fuel Prices in Central America: Evidence from a Non-Linear Panel Smooth Transition Vector Error Correction Model. Energy economics, 42, 226–232.
https://doi.org/10.1016/j.eneco.2014.01.003 - Arellano, M. (1987). Computing Robust Standard Errors for Within-Groups Estimators. Oxford Bulletin of Economics and Statistics, 49(4), 431–434.
https://doi.org/10.1111/j.1468-0084.1987.mp49004006.x - Arzova, S. B., & Şahin, B. Ş. (2024). Macroeconomic and Financial Determinants of Green Growth: An Empirical Investigation on BRICS-T Countries. Management of Environmental Quality: An International Journal, 35(3), 506–524.
https://doi.org/10.1108/MEQ-07-2023-0210 - Ashraf, J. (2024). How do Institutional Factors Affect Sustainable Development? A Comparative Analysis. Economic Change and Restructuring, 57(2), 24.
https://doi.org/10.1007/s10644-024-09580-6 - Auteri, M., Mele, M., Ruble, I., & Magazzino, C. (2024). The Double Sustainability: The Link Between Government Debt and Renewable Energy. The Journal of Economic Asymmetries, 29, e00356.
https://doi.org/10.1016/j.jeca.2024.e00356 - Awosusi, A. A., Rjoub, H., Dördüncü, H., & Kirikkaleli, D. (2023). Does the Potency Of Economic Globalization and Political Instability Reshape Renewable Energy Usage in the Face Of Environmental Degradation? Environmental Science and Pollution Research, 30(9), 22686–22701.
https://doi.org/10.1007/s11356-022-23665-7 - Aydın, A. (2025). The Impact of Economic Factors on Environmental Degradation: Price Instability, Monetary Growth and Renewable Energy Investments. Journal of Economic Studies. 53(1), 123–134.
https://doi.org/10.1108/JES-06-2024-0436 . - Azwardi, A., Zainal, R. I., & Igamo, A. M. (2025). The Impact of Corruption on Green Growth: Theory and Empirical Evidence of Green Economy as a Source of Growth. International Journal of Energy Economics and Policy, 15(2), 600.
https://doi.org/10.32479/ijeep.18343 - Barrett, S., & Graddy, K. (2000). Freedom, Growth, and the Environment. Environment and development economics, 5(4), 433–456.
https://doi.org/10.1017/S1355770X00000267 - Bayar, Y., Borozan, D., & Gavriletea, M. D. (2021). Banking Sector Stability and Economic Growth in Post-Transition European Union Countries. International Journal of Finance & Economics, 26(1), 949–961.
https://doi.org/10.1002/ijfe.1829 - Behera, P., Behera, B., Sethi, N., & Handoyo, R. D. (2024). What Drives Environmental Sustainability? The Role of Renewable Energy, Green Innovation, and Political Stability in OECD Economies. International Journal of Sustainable Development & World Ecology, 31(7), 761–775.
https://doi.org/10.1080/13504509.2024.2333812 - Born, B., & Breitung, J. (2016). Testing for Serial Correlation in Fixed-Effects Panel Data Models. Econometric Reviews, 35(7), 1290–1316.
https://doi.org/10.1080/07474938.2014.976524 - Bui, N. T., & Doan, T. T. T. (2025). Analysis of the Impacts of Financial Development on Green Growth: How Does Institutional Quality Matter? Asia and the Global Economy, 5(2), 100111.
https://doi.org/10.1016/j.aglobe.2025.100111 - Carbó-Valverde, S., & Sánchez, L. P. (2013). Financial Stability and Economic Growth. In Crisis, Risk and Stability in Financial Markets (pp. 8–23). London: Palgrave Macmillan UK.
https://doi.org/10.1057/9781137001832_2 - Cheba, K., Bąk, I., & Pietrzak, M. B. (2023). Conditions of the Green Transformation. The Case of the European Union. Technological and Economic Development of Economy, 29(2), 438–467.
https://doi.org/10.3846/tede.2022.17993 - Chen, Y., Lyulyov, O., Pimonenko, T., & Kwilinski, A. (2024). Green Development of the Country: Role of Macroeconomic Stability. Energy & Environment, 35(5), 2273–2295.
https://doi.org/10.1177/0958305X231151679 - Cox, G. W., & Weingast, B. R. (2018). Executive Constraint, Political Stability, and Economic Growth. Comparative Political Studies, 51(3), 279–303.
https://doi.org/10.1177/0010414017710254 - Danta, S., & Rath, B. N. (2024). Do Green Patent and Renewable Energy Consumption Matter for Sustainable Green Growth in the African Region? Economic Papers: A Journal of Applied Economics and Policy, 43(4), 370–388.
https://doi.org/10.1111/1759-3441.12426 - De Haan, J., & Siermann, C. L. (1996). Political Instability, Freedom, and Economic Growth: Some Further Evidence. Economic Development and Cultural Change, 44(2), 339–350.
https://doi.org/10.1086/452217 - Dolge, K., & Blumberga, D. (2021). Economic Growth in Contrast to GHG Emission Reduction Measures in Green Deal Context. Ecological Indicators, 130, 108153.
https://doi.org/10.1016/j.ecolind.2021.108153 - Efthimiadis, T., & Tsintzos, P. (2023). From Debt to Green Growth: A Policy Proposal. Sustainability, 15(4), 3506.
https://doi.org/10.3390/su15043506 - Ehigiamusoe, K. U., & Samsurijan, M. S. (2021). What Matters for Finance-Growth Nexus? A Critical Survey of Macroeconomic Stability, Institutions, Financial and Economic Development. International Journal of Finance & Economics, 26(4), 5302–5320.
https://doi.org/10.1002/ijfe.2066 - Feng, Y. (1997). Democracy, Political Stability and Economic Growth. British Journal of Political Science, 27(3), 391–418.
https://doi.org/10.1017/S0007123497000197 - Fischer, S. (1992). Macroeconomic Stability and Growth. Cuadernos de Economía, 29(87), 171–186.
- Froot, K.A. (1989). Consistent Covariance Matrix Estimation with Cross-Sectional Dependence and Heteroskedasticity in Financial Data. Journal of Financial and Quantitative Analysis, 24(3), 333–355.
https://doi.org/10.2307/2330815 - Fu, C., Lu, L., & Pirabi, M. (2023). Advancing Green Finance: A Review of Sustainable Development. Digital Economy and Sustainable Development, 1(1), 20.
https://doi.org/10.1007/s44265-023-00020-3 - Global Green Growth Institute (2025, September 18) Index & Simulation. Retrieved from
https://greengrowthindex.gggi.org/ . - Greiner, A. (2007). An Endogenous Growth Model with Public Capital and Sustainable Government Debt. The Japanese Economic Review, 58(3), 345–361.
https://doi.org/10.1111/j.1468-5876.2007.00394.x - Hille, E., Shahbaz, M., & Moosa, I. (2019). The Impact of FDI on Regional Air Pollution in the Republic of Korea: A Way Ahead to Achieve the Green Growth Strategy? Energy Economics, 81, 308–326.
https://doi.org/10.1016/j.eneco.2019.04.004 - Jiang, Y., Sharif, A., Anwar, A., Cong, P. T., Lelchumanan, B., Yen, V. T., & Vinh, N. T. T. (2023). Does Green Growth in E-7 Countries Depend on Economic Policy Uncertainty, Institutional Quality, and Renewable Energy? Evidence from Quantile-Based Regression. Geoscience Frontiers, 14(6), 101652.
https://doi.org/10.1016/j.gsf.2023.101652 - Kasman, S., & Kasman, A. (2015). Bank Competition, Concentration and Financial Stability in the Turkish Banking Industry. Economic Systems, 39(3), 502–517.
https://doi.org/10.1016/j.ecosys.2014.12.003 - Khan, M. (2019). Does Macroeconomic Instability Cause Environmental Pollution? The case of Pakistan Economy. Environmental Science and Pollution Research, 26(14), 14649–14659.
https://doi.org/10.1007/s11356-019-04804-z - Khan, M., Rana, A. T., & Ghardallou, W. (2022). Economic Instability and Pollution Emissions in Developing Countries: A Panel Data Investigation. Energy & Environment, 33(7), 1465–1484.
https://doi.org/10.1177/0958305X221091539 - King, RG, and R Levine (1993) “Financial Intermediation and Economic Growth” In C Mayer and X Vives, eds., Capital Markets and Financial Intermediation (pp 156–189) Cambridge: Cambridge University Press
https://doi.org/10.1017/CBO9780511752056.011 - Kirikkaleli, D., & Sofuoğlu, E. (2023). Does Financial Stability Matter for Environmental Degradation? Geological Journal, 58(9), 3268–3277.
https://doi.org/10.1002/gj.4707 - Klaassen, G. A., & Opschoor, J. B. (1991). Economics of Sustainability or the Sustainability of Economics: Different Paradigms. Ecological economics, 4(2), 93–115.
https://doi.org/10.1016/0921-8009(91)90024-9 - Kurtoglu, B., & Durusu-Ciftci, D. (2024). Identifying the Nexus Between Financial Stability and Economic Growth: The Role of Stability Indicators. Journal of Financial Economic Policy, 16(2), 226–246.
https://doi.org/10.1108/JFEP-09-2023-0260 - Le, T. D., & Nguyen, D. T. (2022). Bank Stability, Credit Information Sharing and a Shift Toward Households’ Lending: International Evidence. International Journal of Managerial Finance, 18(5), 979–996.
https://doi.org/10.1108/IJMF-07-2021-0311 - Le, T. H., Le, H. C., & Taghizadeh-Hesary, F. (2020). Does Financial Inclusion Impact CO2 Emissions? Evidence from Asia. Finance Research Letters, 34, 101451.
https://doi.org/10.1016/j.frl.2020.101451 - Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35(2), 688–726.
- Liu, S., & Zhang, H. (2024). Governance Quality and Green Growth: New Empirical Evidence from BRICS. Finance Research Letters, 65, 105566.
https://doi.org/10.1016/j.frl.2024.105566 - Lucas Jr, R. E. (1988). On the Mechanics of Economic Development. Journal of monetary economics, 22(1), 3–42.
https://doi.org/10.1016/0304-3932(88)90168-7 - Manu, L. P., Adjasi, C. K., Abor, J., & Harvey, S. K. (2011). Financial Stability and Economic Growth: A Cross-Country Study. International Journal of Financial Services Management, 5(2), 121–138.
https://doi.org/10.1504/IJFSM.2011.041920 - Masry, M. (2015). The Role of Political Stability in Achieving Economic Development. Journal of Economics and Sustainable Development, 6(16), 134–153.
- North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
- OECD (2025, September 17) Green Growth. Retrieved from
https://www.oecd.org/en/data.html . - Olczyk, M., & Kuc-Czarnecka, M. (2025). European Green Deal Index: A New Composite Tool for Monitoring European Union’s Green Deal strategy. Journal of Cleaner Production, 495, 145077.
https://doi.org/10.1016/j.jclepro.2025.145077 - Ozili, P. K., & Iorember, P. T. (2024). Financial Stability and Sustainable Development. International Journal of Finance & Economics, 29(3), 2620–2646.
https://doi.org/10.1002/ijfe.2803 - Pesaran, H. 2006. Estimation and Inference in Large Heterogeneous Panels With a Multi-Factor Error Structure. Econometrica 74(4), 967–1012.
https://doi.org/10.1111/j.1468-0262.2006.00692.x - Qamruzzaman, M., & Karim, S. (2024). Green Energy, Green Innovation, and Political Stability Led to Green Growth in OECD Nations. Energy Strategy Reviews, 55, 101519.
https://doi.org/10.1016/j.esr.2024.101519 - Radu, M. (2015). Political Stability-A Condition for Sustainable Growth in Romania? Procedia Economics and Finance, 30, 751–757.
https://doi.org/10.1016/S2212-5671(15)01324-6 - Rakshit, B., & Neog, Y. (2021). Do Macroeconomic Uncertainty and Financial Development Cause Environmental Degradation? Evidence From an Emerging Economy. International Journal of Social Economics, 48(9), 1264–1289.
https://doi.org/10.1108/IJSE-10-2020-0690 - Rogers, W. (1993), Regression Standard Errors in Clustered Samples Stata Technical. Bulletin, 3(13), 19–23.
- Romer, P. M. (1990). Endogenous Technological Change. Journal of political Economy, 98(5, Part 2), S71–S102.
https://doi.org/10.1086/261725 - Safi, A., Wahab, S., Zeb, F., Amin, M., & Chen, Y. (2021). Does Financial Stability and Renewable Energy Promote Sustainable Environment in G-7 Countries? The role of Income and International Trade. Environmental Science and Pollution Research, 28(34), 47628–47640.
https://doi.org/10.1007/s11356-021-13991-7 - Sajid, M., Ansari, M. A. A., Tanveer, A., Faheem, M., & Waseem, A. (2023). Evaluating the Influence of Green Growth, Institutional Quality and Financial Inclusion on Financial Stability: Evidence by Sustainable Finance Theory. Environmental Science and Pollution Research, 30(54), 115965–115983.
https://doi.org/10.1007/s11356-023-30362-6 - Sanchez-Robles, B. (1998). Macroeconomic Stability and Economic Growth: The Case of Spain. Applied Economics Letters, 5(9), 587–591.
https://doi.org/10.1080/758529505 - Shabbir, G., Anwar, M., & Adil, S. (2016). Corruption, Political Stability and Economic Growth. The Pakistan Development Review, 55(4), 689–702.
- Shao, H., Wang, Y., Lee, C. C., & Wen, H. (2024). How Does Political Stability Affect Renewable Energy Finance? International Evidence. Energy, 313, 133829.
https://doi.org/10.1016/j.energy.2024.133829 - Smulders, S., Toman, M., & Withagen, C. (2014). Growth Theory and ‘Green Growth’. Oxford review of economic policy, 30(3), 423–446.
https://doi.org/10.1093/oxrep/gru027 - Sol Murta, F., & Gama, P. M. (2024). Sustainability and the Domestic Credit Market: Worldwide Evidence. Eurasian Economic Review, 14(4), 827–845.
https://doi.org/10.1007/s40822-024-00282-y - Stewart, R., Chowdhury, M., & Arjoon, V. (2021). Bank Stability and Economic Growth: Trade-offs or Opportunities? Empirical Economics, 61(2), 827–853.
https://doi.org/10.1007/s00181-020-01886-4 - Tabash, M. I., Sheikh, U. A., Matar, A., Ahmed, A., & Tran, D. K. (2022). Do Financial Crises Matter for Non-Linear Exchange Rate and Stock Market Cointegration? A Heterogeneous Non-Linear Panel Data Model with PMG Approach. International Journal of Financial Studies, 11(1), 7.
https://doi.org/10.3390/ijfs11010007 - Tran, K. T., & Tran, M. N. (2025). Does Government Effectiveness Reduce the Carbon-Emitting Effect of Urbanization? A Worldwide Study. Management of Environmental Quality: An International Journal, 36(8), 2145–2164
https://doi.org/10.1108/MEQ-10-2024-0450 . - Uddin, I., & Rahman, K. U. (2023). Impact of Corruption, Unemployment and Inflation on Economic Growth Evidence from Developing Countries. Quality & Quantity, 57(3), 2759–2779.
https://doi.org/10.1007/s11135-022-01481-y - Udeagha, M. C., & Muchapondwa, E. (2023). Striving for the United Nations (UN) Sustainable Development Goals (SDGs) in BRICS Economies: The Role of Green Finance, Fintech, and Natural Resource Rent. Sustainable Development, 31(5), 3657–3672.
https://doi.org/10.1002/sd.2618 - Uzar, U. (2020). Political Economy of Renewable Energy: Does Institutional Quality Make a Difference in Renewable Energy Consumption? Renewable Energy, 155, 591–603.
https://doi.org/10.1016/j.renene.2020.03.172 - Wahab, S., Imran, M., Safi, A., Wahab, Z., & Kirikkaleli, D. (2022). Role of Financial Stability, Technological Innovation, and Renewable Energy in Achieving Sustainable Development Goals in BRICS Countries. Environmental Science and Pollution Research, 29(32), 48827–48838.
https://doi.org/10.1007/s11356-022-18810-1 - Wang, W., Li, K., Liu, Y., Lian, J., & Hong, S. (2022). A System Dynamics Model Analysis for Policy Impacts on Green Agriculture Development: A Case of the Sichuan Tibetan Area. Journal of Cleaner Production, 371, 133562.
https://doi.org/10.1016/j.jclepro.2022.133562 - World Bank (2025a, September 18). World Development Indicators. Retrieved from
https://databank.worldbank.org/source/world-development-indicators . - World Bank (2025b, September 18). Worldwide Governance Indicators. Retrieved from
https://databank.worldbank.org/source/worldwide-governance-indicators . - Yang, B., Ali, M., Nazir, M. R., Ullah, W., & Qayyum, M. (2020). Financial Instability and CO2 Emissions: Cross-Country Evidence. Air Quality, Atmosphere & Health, 13(4), 459–468.
https://doi.org/10.1007/s11869-020-00809-7 - Yu, Q., Zuo, X., Ding, H., & Yin, X. (2024). Resource Rent, Economic Stability and the Legal Landscape of China’s Green Growth. Resources Policy, 89, 104704.
https://doi.org/10.1016/j.resourpol.2024.104704 - Zhang, C., Waris, U., Qian, L., Irfan, M., & Rehman, M. A. (2024). Unleashing the Dynamic Linkages Among Natural Resources, Economic Complexity, and Sustainable Economic Growth: Evidence from G-20 Countries. Sustainable Development, 32(4), 3736–3752.
https://doi.org/10.1002/sd.2845
Language: English
Page range: 153 - 171
Submitted on: Dec 12, 2025
Accepted on: Apr 14, 2026
Published on: Jun 12, 2026
Published by: Faculty of Economic Sciences, University of Warsaw
In partnership with: Paradigm Publishing Services
Publication frequency: 1 issue per year
Keywords:
Related subjects:
© 2026 Bertaç Şakir Şahin, Sabri Burak Arzova, published by Faculty of Economic Sciences, University of Warsaw
This work is licensed under the Creative Commons Attribution 4.0 License.