The Impact of Financial Development on Green Growth in GCC: Evidence from Machine Learning

This study examines the relationship between financial development and green GDP in the Gulf Cooperation Council (GCC) region from 1990 to 2020. Environmental sustainability is integrated into economic growth assessments through the use of green GDP. The impact of financial development on green GDP was analyzed using econometric OLS regression and machine learning techniques: Random Forest, Gradient Boosting, and Artificial Neural Networks. Results indicate that financial development leads to increased investment in renewable energy and sustainable initiatives. However, simultaneously, poor industrial waste management and inadequate industrial expansion associated with such development contribute to environmentally degrading practices, undermining the notion of 'clean' or 'sustainable' environmental degradation. Among the models implemented, Gradient Boosting was found to be the most accurate in forecasting green economic performance and thus can be deemed appropriate for predictive analysis on green economic performance.