Although green financing is being widely encouraged as a tool to reconcile economic growth and environmental sustainability, there is limited empirical evidence on how green financing helps towards sustainable economic development for energy-poor, oil-dependent economies. The literature from existing studies paid little attention to Nigeria, despite playing a significant role in the energy transition in Africa. The shortcoming is exacerbated by poor adherence to the Nigerian Sustainable Banking Principles, inadequate green bond market structure and lack of quantitative proof of the economic returns of green financing. This paper examines the impact of green financing on sustainable economic development in Nigeria using annual time series data from 1981 to 2024. The principal-component composites of adjusted net savings, the ecological footprint to biocapacity ratio and the Human Development Index serve as proxies for sustainable economic development, and the PCA composites of renewable energy and CO₂ indicators serve as proxies for green financing. The order of integration is mixed, which is confirmed by the Johansen procedure and ARDL bounds testing is applied after the long run cointegration was confirmed. The results reveal that there is a long-run relationship between green financing and sustainable economic development which is statistically significant and positive and the adjustment speed is rapid. FDI is a positive force to sustain this positive trend, while inflation, money supply growth and currency devaluation are drags. The study calls for an increase in green bond issuance and tighter regulation enforcement.

Keywords: Green financing, Sustainable economic development, Ecological footprint, Adjusted net savings, Oil dependent economy.