Examining the role of artificial intelligence, financial innovation, and green energy transition in enhancing environmental quality

Abdul Majeed, Yuantao Xie, Chongyan Gao, Anna Min Du and Muniba,

International Review of Economics & Finance, 2025, vol. 100, issue C

Abstract: The growth of emerging economies has led to heightened environmental challenges, underscoring the importance of implementing sustainable technologies and clean energy transitions to alleviate the ecological consequences. Hence, this study explores the roles of Artificial Intelligence (AI), Financial Innovation (FI), and Green Energy Transition (GET) in improving environmental quality in emerging economies. The results are robust using advanced econometric techniques that account for cross-sectional dependence, heterogeneity, unit roots, and cointegration. We test short- and long-run relationships using the cross-sectional augmented autoregressive distributed lag (CS-ARDL) model and validate the results using feasible generalized least squares (FGLS) estimators. The findings indicated the roles of AI (−0.029), FI (−0.071), and GET (−0.144) in decreasing the ecological footprint and enhancing environmental quality. However, economic growth (0.337) contributes to an increased ecological footprint. These findings highlight that sustainable technologies, FIs, and clean energy transitions are necessary to address environmental issues and sustainable economic growth. These findings provide policymakers with valuable insights into the sustainable development of emerging economies.

Keywords: Artificial intelligence; Financial innovation; Green energy transition; Ecological footprint; Environmental quality; Emerging economies (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:100:y:2025:i:c:s1059056025002552

DOI: 10.1016/j.iref.2025.104092

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