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. 2022 May 3;19(9):5544.
doi: 10.3390/ijerph19095544.

Can Financial Institutional Deepening and Renewable Energy Consumption Lower CO2 Emissions in G-10 Countries: Fresh Evidence from Advanced Methodologies

Usman Mehmood  1   2 , Salman Tariq  3 , Zia Ul-Haq  1 , Ephraim Bonah Agyekum  4 , Salah Kamel  5 , Mohamed Elnaggar  6   7 , Hasan Nawaz  1 , Ammar Hameed  1 , Shafqat Ali  1
Affiliations

Can Financial Institutional Deepening and Renewable Energy Consumption Lower CO2 Emissions in G-10 Countries: Fresh Evidence from Advanced Methodologies

Usman Mehmood et al. Int J Environ Res Public Health. .

Abstract

To tackle the challenges associated with global warming and climate change, several countries set their targets to lower carbon emissions in accordance with COP21 (Paris Conference). Even though studies highlighted the different aspects that contribute to environmental degradation, there still exists the scarcity of adequate research that emphasizes the environmental implications of financial institutional deepening, renewable energy consumption (REC), and technology innovations. Therefore, this study investigated the significance of financial institutional deepening, REC, gross domestic product (GDP), imports, exports, and technology innovations to achieve sustainability in G-10 countries, namely The Netherlands, Germany, France, Switzerland, United Kingdom, Sweden, Japan, Belgium, Canada, and Italy from 1990 to 2020. The results obtained from cross-sectionally augmented autoregressive distributed lag (CS-ARDL) and the dynamic common correlated effects mean group (DCCEMG) models reveal that financial institutional deepening and imports positively impact CO2 emissions (CO2e) both in the long and short run. A 1% increase in financial institutional deepening and import will increase CO2e by 0.5403% and 0.2942% in the short run and 0.2980% and 0.1479% in the long run levels, respectively. Contrary to this, REC, GDP, exports, and technology innovations improve environmental quality in these countries. The Dumitrescu & Hurlin causality test shows bidirectional causality between imports and CO2e, GDP and CO2e, exports and CO2e, and financial institutional deepening and CO2e, compared to unidirectional causality from technology innovations to CO2e and from REC to CO2e. Apart from this, the outcomes suggest that policymakers in G-10 countries have to consider their financial markets and firms to revise their current environmental policies.

Keywords: CO2 emissions; G-10 countries; GDP; financial institutional deepening; renewable energy consumption.

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Conflict of interest statement

The authors declare no conflict of interest.

Figures

Figure 1
Figure 1
Shows the wavelet coherence between CO2e and (a) financial institutional deepening (FID), (b) GDP, (c) import (IMP), (d) export (EXP), (e) REC, and (f) technology innovation (TI) for G-10 countries from 1990 to 2020.
Figure 1
Figure 1
Shows the wavelet coherence between CO2e and (a) financial institutional deepening (FID), (b) GDP, (c) import (IMP), (d) export (EXP), (e) REC, and (f) technology innovation (TI) for G-10 countries from 1990 to 2020.
Figure 1
Figure 1
Shows the wavelet coherence between CO2e and (a) financial institutional deepening (FID), (b) GDP, (c) import (IMP), (d) export (EXP), (e) REC, and (f) technology innovation (TI) for G-10 countries from 1990 to 2020.
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