Does financial sector is helpful for curbing carbon emissions through the investment in green energy projects: evidence from MMQR approach

Human activities have resulted in a dramatic decline in environmental quality over the past several decades. Specifically, the emission of carbon dioxide has caused irreparable harm to human health and the planet’s ability to sustain life. To meet the urgent demand for sustainable development, this study evaluates the influence of economic complexity (ECI), renewable energy consumption (RENE), and financial development (FD) on CO₂ emissions in N-11 countries from 1995 to 2019. For this purpose, we use several preliminary tests for examines the characteristics of the data, and panel quantile regression (PQR) and the method of moments quantile regression (MMQR) for analyses the heterogenous relationship between the variables. The empirical outcomes confirm the presence of EKC hypothesis in N-11 countries. Results also shows that financial development has positive impact on CO₂ emissions, whereas the combine effect of financial development and renewable energy consumption (FD*RENE) on carbon emissions is negative. Based on the empirical outcomes, this study suggests that there is a possibility that improved financial infrastructure will exacerbate environmental damage, despite the fact that this is generally advantageous. The environmental damage caused by the rapid growth of the N11 countries can be mitigated if their governments invest in sustainable technologies and implement environmental regulations.