A PRISMA ALIGNED SYSTEMATIC LITERATURE REVIEW ON GREEN FINANCE: BRIDGING THE GAP TOWARDS A SUSTAINABLE FUTURE

Abstract

Purpose: The growing need to embed environmentally responsible practices has placed green initiatives at the forefront of global development agendas. As a dynamic and evolving dimension of the monetary and economic framework, green finance makes a significant contribution to enabling this transition. This study systematically reviews global advancements in green finance between 2010 and 2025, with particular emphasis on regulatory frameworks, financial instruments, and their contributions to environmental sustainability.

Design/methodology/approach: A PRISMA-driven systematic literature review (SLR) approach has been utilized, retrieving 340 peer-reviewed studies from four academic databases, including Scopus, Web of Science, ScienceDirect, and Google Scholar. Following screening and assessment, 100 studies met the inclusion criteria. The review highlights emerging trends, thematic developments, and critical debates in the field, emphasizing the role of green financial instruments, policy frameworks, and institutional mechanisms in mitigating climate risks, reducing carbon emissions, and safeguarding ecological systems.

Findings: The study underscores emerging trends in green finance mechanisms, notably green bonds, sustainability-linked loans, carbon markets, and blended finance instruments. It identifies key drivers of adoption, including regulatory frameworks, policy support, market pressures, investor demand, technological innovations such as fintech and blockchain, and growing environmental awareness. Furthermore, it reviews methodological approaches employed in green finance research while acknowledging persistent barriers, such as limited data access, methodological shortcomings, regulatory fragmentation, and inadequate transparency.

Overall, the findings underscore the transformative potential of incorporating green financial assistance into widely accepted economic and monetary frameworks, thereby reinforcing its crucial role in enhancing financial robustness and maintaining ecological balance. The study concludes by calling for further empirical investigations to strengthen the evidence base on how green finance can accelerate sustainable development and long-term ecological integrity.

Originality/Value: This PRISMA-aligned systematic review is the first to develop a unified conceptual framework by integrating regulatory taxonomies (antecedents), financial instruments, and environmental outcomes of green finance. It further examines the role of institutional quality, regulatory frameworks, and policy interventions, alongside the participation of MSMEs, in advancing green financial mechanisms and facilitating ecological preservation. As these dimensions remain underexplored, the study emphasizes the need for future empirical investigations to address existing gaps.