How do financial development and institutional quality influence greenhouse gases in the Next-11 economies?

Muhammad Kamran Bhatti (), Shujin Zhu (), Ali Hassan, Muhammad Ali Husnain and Aqsa Bilal Hussain
Additional contact information
Muhammad Kamran Bhatti: Hunan University
Shujin Zhu: Hunan University
Ali Hassan: Hunan University
Muhammad Ali Husnain: Hunan University
Aqsa Bilal Hussain: Xi’an Jiaotong University

Humanities and Social Sciences Communications, 2025, vol. 12, issue 1, 1-14

Abstract: Abstract The sustainable development goals of many nations are challenged by the need to reduce emissions, improve ecological integrity, and address the impacts on climatic alteration. The study examines how the financial innovation and institution quality effect environmental sustainability in NEXT-11 countries between 1995 and 2023. This study analyzes how financial growth and institutional quality affects CO2, N2O, and CH4 emissions in Next-11 nations, filling research gaps through advanced econometrics and policy-focused findings. Based on the second-generation Panel ARDL method and further with robustness checks of DOLS and FMOLS, this research found that the financial innovation contributes to mitigating carbon emissions but affects other types of gases (N2O and CH4) more complexly. The financial development decreases CO₂ emissions; it raises N2O emissions, though slightly, and reduces CH4 emissions, so financial development does exert different impacts on different sectors. Conversely, we found that increases in institutional strength consistently had positive effects on environmental outcomes. Reductions in CO2, N2O, and CH4 emissions were associated with increased governance and regulatory quality. Results reveal the significance of both financial innovation and institution quality in determining the environmental destiny of emerging economies. When economic growth is linked to strong institutions, it plays a deterrent role in emissions, highlighting the significance of sustainable finance and good governance for environmental degradation.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41599-025-05897-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05897-3

Ordering information: This journal article can be ordered from
https://www.nature.com/palcomms/about

DOI: 10.1057/s41599-025-05897-3

Access Statistics for this article

More articles in Humanities and Social Sciences Communications from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().