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Publication date: 20 December 2024

Anam Ul Haq Ganie, Arif Mohd Khah and Amir Parvaiz

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.

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.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2054-6238

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