ABSTRACT
The rising global focus on environmental sustainability has intensified interest in the drivers of green growth. This study examines the impact of Islamic finance on green growth in selected Organization of Islamic Cooperation (OIC) member countries from 2013 to 2023 using panel data regression analysis. Islamic finance is represented by Islamic financial assets and Islamic banking financing, while the Green Growth Index (GGI) serves as the primary measure of environmental- economic performance. Control variables include real GDP per capita, foreign direct investment (FDI), renewable energy consumption, forest area, and urbanization. The results reveal that real GDP, urbanization, renewable energy consumption, and forest area positively influence the GGI, whereas Islamic financial assets, Islamic banking financing, and FDI show no significant effects. These findings suggest that while Islamic finance holds potential to support ecological transitions, its contribution remains limited due to its concentration in traditional sectors and the lack of standardized green instruments. Strengthening regulatory frameworks, promoting Sharia-compliant green financial products, and aligning foreign investment with sustainability objectives are critical for advancing green growth in OIC economies.
