Driving sustainability: The nexus of financial development, economic globalization, and renewable energy in fostering a greener future

Financial development serves as a key indicator to achieve rapid economic growth and environmental sustainability globally. Therefore, this study explores how financial development, economic globalization, and green energy influence carbon emissions, along with GDP, technological innovation, and trade openness, in the Next-11 emerging economies from 1990 to 2022. The cointegration and causality associations are analyzed by using the Panel Common Correlated Effect Mean Group (CCEMG) and Augmented Mean Group (AMG) techniques to achieve our objective. The empirical results from the AMG analysis indicate that financial development, technological innovation, and green energy contribute to diminishing CO 2 emissions by 1.25%, 2.23%, and 2.90%, respectively. Conversely, economic globalization, trade liberalization, and economic growth have negative impacts on the environment, increasing emissions by 1.04%, 0.13%, and 0.18%, respectively. Similarly, findings from the CCEMG outcomes expose the inverse link between financial expansion and environmental degradation. Our outcomes highlight that policymakers should prioritize sustainable practices for the development of financial markets, particularly for businesses that invest in cleaner technologies and renewable energy. This integrated strategy is necessary for the Next-11 emerging countries to accomplish their SD goals and effectively confront climate change.

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