FINANCIAL DEVELOPMENT, ENERGY TRANSITION, AND CARBON EMISSIONS IN ARAB ECONOMIES

Hanane Tlemcani

Abstract


This paper investigates the role of financial development in accelerating the energy transition and reducing carbon dioxide emissions in Arab countries over the period 2000–2022. The study uses a panel autoregressive distributed lag model, estimated via the pooled mean group approach, to examine the long-run and short-run effects of financial development, foreign direct investment, economic growth, carbon dioxide emissions, and political stability on renewable energy consumption. The results show that financial development has a negative and statistically significant long-run effect on renewable energy consumption, indicating that domestic financial systems in Arab countries remain weakly oriented toward green investment. Conversely, foreign direct investment and economic growth positively support the transition toward renewable energy, while political stability has no statistically significant effect. These findings suggest that financial deepening alone is insufficient unless it is supported by green finance instruments, stronger regulatory incentives, and climate-oriented economic policies. The paper is relevant to researchers, policymakers, financial institutions, and energy regulators.


Keywords


banking and finance; business and the environment; energy transition; sustainable development; foreign direct investment;

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References


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DOI: http://dx.doi.org/10.12709/mest.14.14.02.25

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