Linking clean energy consumption, globalization, and financial development to the ecological footprint in a developing country: Insights from the novel dynamic ARDL simulation techniques

Linking clean energy consumption, globalization, and financial development to the ecological footprint in a developing country: Insights from the novel dynamic ARDL simulation techniques

24 February 2024 | Solomon Prince Nathaniel, Zahoor Ahmed, Zilola Shamansurova, Hossein Ali Fakher
This study examines the impact of clean energy consumption, financial development, and globalization on the ecological footprint (EFP) in Bangladesh using dynamic ARDL simulation techniques and bootstrap causality tests. The findings reveal that clean energy has no significant effect on EFP, while globalization and financial development significantly reduce EFP by 0.25% and 0.08%, respectively. The study confirms the existence of the Environmental Kuznets Curve (EKC) hypothesis, indicating that environmental degradation initially increases with economic growth but eventually decreases after a certain threshold. The results also show unidirectional causality from globalization and financial development to EFP, while economic growth drives globalization. Additionally, a one-way causality flows from globalization to financial development, and financial development Granger causes clean energy. The study recommends that public policies focus on funding environmental-friendly technologies and green innovations, particularly in recently developed energy-saving technologies to ensure complementarity between economic growth and environmental protection. The study also highlights the importance of financial development in promoting environmental sustainability and suggests that policymakers should prioritize economic growth without compromising environmental attributes. The study's limitations include data constraints and a focus on a single developing country, with future research needed to explore the relationship between globalization and EFP in more detail.This study examines the impact of clean energy consumption, financial development, and globalization on the ecological footprint (EFP) in Bangladesh using dynamic ARDL simulation techniques and bootstrap causality tests. The findings reveal that clean energy has no significant effect on EFP, while globalization and financial development significantly reduce EFP by 0.25% and 0.08%, respectively. The study confirms the existence of the Environmental Kuznets Curve (EKC) hypothesis, indicating that environmental degradation initially increases with economic growth but eventually decreases after a certain threshold. The results also show unidirectional causality from globalization and financial development to EFP, while economic growth drives globalization. Additionally, a one-way causality flows from globalization to financial development, and financial development Granger causes clean energy. The study recommends that public policies focus on funding environmental-friendly technologies and green innovations, particularly in recently developed energy-saving technologies to ensure complementarity between economic growth and environmental protection. The study also highlights the importance of financial development in promoting environmental sustainability and suggests that policymakers should prioritize economic growth without compromising environmental attributes. The study's limitations include data constraints and a focus on a single developing country, with future research needed to explore the relationship between globalization and EFP in more detail.
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