Sustainability with environmental policy stringency and financial development for green technological innovations: Evidence from Sub-Saharan Africa

Abstract

This study is prompted by the United Nations Sustainable Development Goals (UN-SDGs) and their anticipated effect by 2030. Financial development and environmental policy stringency are becoming crucial tools for tackling environmental degradation. However, there is a limited body of research that explores their interactive roles for green technological innovation and contributes to environmental sustainability, particularly in Sub-Saharan African economies. In this study, we investigated how financial development and environmental policy stringency moderate the relationship between technical innovation and load capacity factor in the panel of 29 Sub-Saharan African (SSA) countries from 1990 to 2020. The study employed multifaceted empirical techniques, including Dynamic Ordinary Least Square (DOLS), Fully Modified Ordinary Least Square (FMOLS), Canonical Cointegration Regression (CCR), and method of Moment Quantile Regression (MMQR) estimators. The findings show that coefficients of the interaction of financial development and green innovation (FD*INV), environmental policy stringency and green innovation (EPS*INV), and financial development and energy transition (FD*ET) indicate a positive contribution to environmental sustainability. Further, feasible generalized least squares (FGLS) and bootstrapped quantile regression (BSQR) approaches are used to check the robustness of the results. This study offers a policy framework that focuses on developing a sustainable economy to achieve SDGs 7 & 13. The primary objective is to build a green economy and ensure long-term environmental sustainability in SSA countries.