A Comparative Institutional Analysis of Green Finance Mechanisms for Egypt's Sustainable Infrastructure Transition

This research goes further than just being descriptive in the analysis of green finance instruments, as it intends to create and deploy a comparative institutional framework that will account for the different degrees of effectiveness that these instruments have in tackling market and government failures in developing nations. By using mixed-methods for the analysis of Egypt's green projects such as the Benban Solar Park and Suez Canal Economic Zone green hydrogen project, we show that the success of an instrument does not only depend on its design features but also on its correspondence with certain configurations of state capacity and market maturity. From the theoretical perspective, we are merging transaction cost economics, and institutional theory, and political economy to elaborately explain: (1) the way multilateral development banks lowered transaction costs in Benban through contracting standardization; (2) the reason why there is regulatory fragmentation in spite of high-level commitments; and (3) the political economy constraints that in turn create “greenwashing” risks. Based on the above, we detected three institutional arrangements: the “de-risked enclave” (Benban), the “viability gap paradox” (SCZone hydrogen), and the “sovereign signaling” model (green bonds). Our shift in focus from the instrument design to the institutional fit will benefit the sustainable finance literature and also provide Egypt and other similar emerging economies with practical policy pathways. JEL Classification: Q56, G38, O53, Q58, G32.