Influence of fiscal decentralization, fintech, and mineral resources on green productivity of G5 countries

Abstract

The study explores how regional financial autonomy, financial technologies, and resource management strategies intersect to influence sustainable practices and environmental efficiency in G5 economies. The yearly data from 1990 to 2021 has been taken for Canada, Japan, Germany, the United Kingdom, and the United States of America. Empirical analysis of the Cross-sectional Augmented Distributed Lag (CS-ARDL) modeling framework has been performed after a preliminary investigation regarding the variables' cross-sectional dependence, slope heterogeneity, and unit root properties. The outcomes of long-run estimation reveal the positive impact of fintech and revenue decentralization, while mineral resources and expenditure decentralization negatively influence green productivity. Similar results are observed in the short-run; however, their marginal effects are relatively lower. Moreover, the error correction term is negative and significant, indicating an 81.4% speed of adjustment annually to restore the obtained model's equilibrium system. These estimates are validated by the Augmented Mean Group (AMG) and Common Correlated Effect Mean Group (CCEMG) estimators. A bi-directional causality of fintech and revenue decentralization is observed, which offers valuable policy implications.