Green Innovation at the Crossroads of Financial Development, Resource Depletion, and Urbanization: Paving the Way to a Sustainable Future from the Perspective of an MM-QR Approach

Abstract

Global warming has become a big problem around the world, and it is because of what people do. As a possible answer, countries are looking for ways to keep their economies growing and invest in technologies that use clean energy. Therefore, the notion of carbon neutrality has emerged as a crucial policy strategy for nations to attain sustainable development. This study expands the existing discussions on carbon neutrality by investigating the influence of key factors, including green innovation, financial development, natural resources depletion, trade openness, institutional quality, growth, and urbanization on the progress made towards attaining a carbon neutral state in the BRICS nations. This study considers the Method of Moment Quantile-Regression (MM-QR) and Prais–Winsten correlated panel corrected standard errors (PCSEs) estimators to investigate the study objectives over the period of 1990–2021. Under the investigated outcomes, this study validated the significant role of urbanization and growth in carbon neutrality. On the other hand, this study finds the positive role of openness, green innovation, resource depletion, institutional quality, and financial development on environmental deterioration. However, under a systematic analysis, this study utilizes different proxies of the financial sector, for instance, financial complexity, financial efficiency, financial stability, and domestic credit by financial sector, and provides interesting outcomes. Based on these outcomes, this study also provides suggestions to attain desired levels of sustainability.