The Interplay of Monetary Policy and FDI in Shaping Green Finance
Nguyen-Quynh-Nhu Ngo  1, 2@  , Ha Pham  3  , Xuan-Hoang Tran  4  , Vuong Ngoc-Yen-Nhi  5  
1 : Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City
2 : Faculty of Finance and Banking, Open University, Ho Chi Minh City
3 : Open University Ho Chi Minh City
4 : Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City
5 : Faculty of Business Administration Ho Chi Minh University of Banking, Ho Chi Minh City

This study explores the effects of monetary policy and foreign direct investment (FDI) on green finance performance using data from 144 countries between 1990 and 2022. Our findings support Pecking Order Theory, showing that increased broad money (BM) supply enhances green finance as firms prioritize internal funding. FDI also positively impacts green finance by supplementing internal funds. Conversely, high lending interest rates (LR) negatively affect green finance, suggesting that reduced rates can promote sustainable investments. Regional analysis indicates that BM generally supports green finance, while LR's effects vary. FDI consistently boosts green finance across regions, though its interaction with BM and LR differs. During economic recessions, BM's positive impact strengthens, and FDI enhances LR's effects. Managers should leverage BM and FDI to fund green projects, advocate for favorable lending rates, tailor strategies to local contexts, and utilize FDI during downturns to support renewable energy investments. This study provides new insights into the roles of monetary policy and FDI in sustainable economic growth.


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