Does the Moderating Role of Financial Development on Energy Utilization Contributes to Environmental Sustainability in GCC Economies?

Abstract

This present research examined the association among carbon emissions, financial development, economic growth, natural resources, and energy usage in GCC nations within the environmental Kuznets curve framework by applying the datasets between 1995 and 2019. It used some empirical approaches, including second-generation unit roots and cointegration methods and method of moments quantile regression (MMQR). We detected a cointegrating interconnection between carbon emissions and financial development, energy usage, economic growth, natural resources, and squared of economic growth in the long term. Furthermore, the findings of the MMQR reveal that economic growth, financial development, energy usage, and natural resources degrade the environment, as well as proving the presence of the EKC hypothesis. Moreover, the results also demonstrated that financial development greatly moderates energy usage in order to attain environmental sustainability. Furthermore, the fixed-effect ordinary least squares, fully modified ordinary least squares, and dynamic ordinary least squares were also used in the study as a soundness check of the MMQR approach. The path of causality moves from financial development, economic growth, and squared of economic growth to CO2 emissions. Lastly, the causality direction runs from carbon emissions to energy usage. Based on these findings, the energy mix of the region must be revised by ensuring the promotion of sustainable energy sources and other energy-efficient technology in order to attain the quality of the environment.