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Does financial sector is helpful for curbing carbon emissions through the investment in green energy projects: evidence from MMQR approach

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Abstract

Human activities have resulted in a dramatic decline in environmental quality over the past several decades. Specifically, the emission of carbon dioxide has caused irreparable harm to human health and the planet’s ability to sustain life. To meet the urgent demand for sustainable development, this study evaluates the influence of economic complexity (ECI), renewable energy consumption (RENE), and financial development (FD) on CO2 emissions in N-11 countries from 1995 to 2019. For this purpose, we use several preliminary tests for examines the characteristics of the data, and panel quantile regression (PQR) and the method of moments quantile regression (MMQR) for analyses the heterogenous relationship between the variables. The empirical outcomes confirm the presence of EKC hypothesis in N-11 countries. Results also shows that financial development has positive impact on CO2 emissions, whereas the combine effect of financial development and renewable energy consumption (FD*RENE) on carbon emissions is negative. Based on the empirical outcomes, this study suggests that there is a possibility that improved financial infrastructure will exacerbate environmental damage, despite the fact that this is generally advantageous. The environmental damage caused by the rapid growth of the N11 countries can be mitigated if their governments invest in sustainable technologies and implement environmental regulations.

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Availability of data and materials

The datasets used and analyzed during the current study are available from the corresponding author on reasonable request.

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Funding

 This research is funded by Thoungmai University, Hanoi, Vietnam.

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Authors and Affiliations

  1. Lahore Business School, The University of Lahore, Lahore, Pakistan

    Muhammad Farhan Basheer & Saria Ghulam Hassan

  2. UCSI Graduate Business School, UCSI University, Kuala Lumpur, Malaysia

    Ahsan Anwar

  3. Research Fellow, Department of Interdisciplinary Studies, University of Religions and Denominations, Qom, Iran

    Ahsan Anwar

  4. College of Business Administration, Imam Abdulrahman Bin Faisal University, 2835 King Faisal Road, Dammam, 34212, Kingdom of Saudi Arabia

    Ibrahim Tawfeeq Alsedrah

  5. Faculty of Economics, Thuongmai University, Hanoi, Vietnam

    Phan The Cong

Authors
  1. Muhammad Farhan Basheer
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  2. Ahsan Anwar
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  4. Ibrahim Tawfeeq Alsedrah
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  5. Phan The Cong
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Contributions

Muhammad Farhan Basheer performed conceptualization, methodology, data analysis, writing—original draft, writing—review & editing; Ahsan Anwar provided conceptualization, methodology, data analysis, writing—review & editing; Saria Ghulam Hassan analyzed methodology, data analysis, writing—review & editing; Ibrahim Tawfeeq Alsedrah approved writing—review & editing; Phan The Cong conducted data collection, data analysis, writing—review & editing.

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Correspondence to Muhammad Farhan Basheer.

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Basheer, M.F., Anwar, A., Hassan, S.G. et al. Does financial sector is helpful for curbing carbon emissions through the investment in green energy projects: evidence from MMQR approach. Clean Techn Environ Policy 26, 901–921 (2024). https://doi.org/10.1007/s10098-023-02659-0

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