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Energy efficiency and environment: examining the role of financial expansion for emerging economies

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Abstract

This research aims to investigate the factors influencing carbon emissions in the emerging economies while particularly focusing on the energy efficiency and financial expansion. Since the debate regarding the influence of economic growth, energy efficiency, and financial expansion is still ongoing with the contradictory arguments during the last few years, such issue may lead to inefficient policy adoption, which lead this research to re-investigate the impact of these variables on CO2 emissions. This study uses advance econometric approaches on the data for emerging economies covering the period from 1990 to 2021. The examined results indicate the validity of cross-section dependence and long-run cointegration association between the study variables. Dur the issue of non-normal distribution of the variables, this study uses the novel non-parametric method which offers comprehensive evidence of the positive impact of economic growth and financial expansion on carbon emissions. In contrast, the results illustrate that energy efficiency and research and development investment significantly and adversely affect carbon emissions in the emerging economies and improve environmental sustainability. The robustness of the model is validated via bootstrap quantile regression. This study suggests strengthening financial expansion, improving energy efficiency, and increasing research and development investment to attain low carbon economy.

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Data availability

All the data is acquired from World Bank, World Development Indicators (WB, WDI).

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Authors and Affiliations

  1. School of Economics and Finance, Xi’an Jiaotong University, Xi’an, China

    Nafeesa Mughal, Jun Wen & Tolassa Temesgen Hordofa

  2. Administrative Science Department, Community College, King Saud University, Riyadh, Saudi Arabia

    Ahmad Mohammed Alamri

  3. Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Lefke, Northern Cyprus, TR-10, Mersin, Turkey

    Dervis Kirikkaleli

  4. Instituto Cientifico (IC-UAC), Universidad Andina del Cusco, Urb. Ingeniería Larapa Grande A-7, Cusco, Peru

    Carlos Samuel Ramos-Meza

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  1. Nafeesa Mughal
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  4. Jun Wen
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  6. Tolassa Temesgen Hordofa
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Contributions

The idea of the original draft belongs to Nafeesa Mughal and Dr. Ahmad Mohammed Alamri. Dervis Kirikkaleli and Jun Wen designed the experiment and collect the dataset. The introduction and literature review sections are written by Carlos Samuel Ramos-Meza. Tolassa Temesgen Hordofa constructed the methodology section and empirical outcomes in the study and also contributed to the interpretation of the outcomes. All the authors read and approved the final manuscript.

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Correspondence to Nafeesa Mughal.

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Mughal, N., Alamri, A.M., Kirikkaleli, D. et al. Energy efficiency and environment: examining the role of financial expansion for emerging economies. Energy Efficiency 16, 44 (2023). https://doi.org/10.1007/s12053-023-10109-5

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