Abstract:
This study examines the relationships among financial development, renewable
energy, institutional quality, and carbon dioxide (CO2) emissions using dynamic panel data
techniques from 1990 to 2020. The empirical results of the econometric analysis suggest that
financial development does not necessarily reduce CO2 emissions unless institutional quality
improves. Financial development exacerbates environmental deterioration by increasing CO2
emissions in all regions except Europe, whereas renewable energy consumption and
institutional quality improve environmental quality. Thus, good institutional quality emerged
as a mediating variable between financial development and environmental quality in curbing
CO2 emissions and promoting sustainable development worldwide.
