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Unveiling the nexus of renewable energy, institutional quality and financial development in India’s carbon emission landscape

Anam Ul Haq Ganie (Department of Economics, Central University of Kashmir, Ganderbal, India)
Arif Mohd Khah (Department of Economics, Central University of Kashmir, Ganderbal, India)
Amir Parvaiz (Department of Economics, Central University of Kashmir, Ganderbal, India)

Journal of Economic and Administrative Sciences

ISSN: 2054-6238

Article publication date: 20 December 2024

47

Abstract

Purpose

The primary objective of this research is to assess the influence of financial development, institutional quality and renewable energy consumption on India’s carbon emissions.

Design/methodology/approach

This study utilises econometric methodologies, specifically the autoregressive distributed lag (ARDL) model and Toda–Yamamoto causality tests, to explore the interplay among renewable and non-renewable energy consumption, financial development, economic growth, institutional quality, trade openness and carbon emissions in India spanning the years 1996–2019.

Findings

The research indicates that in India, greater utilisation of renewable energy, enhanced financial development and improved institutional quality are linked to lower carbon emissions. On the contrary, an escalation in carbon emissions is related to the consumption of non-renewable energy and greater trade openness. The Toda–Yamamoto causality tests reveal one-way causal relationships from institutional quality, financial development, non-renewable energy consumption and economic growth to CO2 emissions. Furthermore, the study identifies reciprocal causation, demonstrating that carbon dioxide emissions influence renewable energy consumption and trade openness.

Research limitations/implications

This study recommends that forthcoming research expand its focus by integrating more comprehensive indicators such as consumption, production, transport-based CO2 emissions or ecological footprint. Additionally, to bolster the rigour of future inquiries, researchers might consider exploring alternative regression analysis methods like NARDL and STAR.

Originality/value

This study addresses a significant gap in the existing literature by being the first empirical investigation into the effects of renewable energy consumption, institutional quality and financial development on carbon emissions in the Indian economy. Unlike prior research, we consider a comprehensive financial development and institutional quality index, providing a more holistic perspective. This unique approach contributes valuable insights into the environmental challenges faced by the Indian economy, offering a nuanced understanding of the complex dynamics of environmental degradation in this region.

Keywords

Acknowledgements

Anam Ul Haq Ganie is a recipient of Indian Council of Social Science Research (ICSSR) Doctoral Fellowship. His article is largely an outcome of his doctoral work sponsored by ICSSR. However, the responsibility for the facts stated, opinions expressed and the conclusions drawn is entirely that of the author.

Citation

Ganie, A.U.H., Khah, A.M. and Parvaiz, A. (2024), "Unveiling the nexus of renewable energy, institutional quality and financial development in India’s carbon emission landscape", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-01-2024-0019

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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