The impact of financial decentralization and investments in green power on the ecology in the European union: How does the governance of institutions moderate this relationship?

Abstract

There has been a growing emphasis in recent scholarship on the environmentalist movement, necessitating robust data to substantiate claims regarding the impacts of financial decentralization and investments in green power on the ecology. This study investigates the multifaceted impact of these factors within a subset of EU member states from 2000 to 2020, with a particular focus on their implications for environmental sustainability. Employing an advanced-panel method, the investigation utilizes enhanced self-regressive distribution delays (CS-ARDL) to analyze the cumulative and immediate connections between financial decentralization, green power investments, and environmental outcomes. The study reveals that effective governance of institutions plays a crucial role in moderating this relationship, influencing the extent to which financial decentralization and green energy investments contribute to environmental preservation. Preliminary findings indicate that regions with decentralized financial systems and substantial investments in green power exhibit reduced carbon dioxide emissions and improved environmental quality. This positive impact is further amplified by sound institutional oversight, ensuring that investments in clean energy align with ecological sustainability goals.The study also underscores the importance of a coordinated approach, where financial decentralization, investments in green power, and institutional governance synergistically contribute to environmental resilience and sustainable development. These efforts not only mitigate environmental challenges but also stimulate economic growth, job creation, and technological innovation in the renewable energy sector. The impact of financial decentralization and investments in green power on environmental sustainability in the European Union is significant, with governance playing a pivotal role in shaping positive outcomes. This study provides valuable insights for policymakers and stakeholders seeking to promote a greener and more sustainable future within the EU.