“…In this regard, the environmental economics literature considers environmental Kuznets curve (EKC) and mostly concludes an inverted U‐shaped relationship between income and CO 2 emissions (Lantz & Feng, 2006). Besides, CO 2 emissions seem to be affected by other economic factors such as economic growth (Adedoyin et al, 2020; Ahmad et al, 2016; de Souza et al, 2019; Liu et al, 2019; Shahbaz et al, 2013; Wang, 2011), energy consumption (Ahmad et al, 2016), foreign direct investment (C. Zhang & Zhou, 2016), financial development (Dogan & Seker, 2016; Salahuddin et al, 2015; Shahbaz et al, 2013), and innovations (Y. J. Zhang et al, 2017). However, the relationship between macroeconomic institutional factors and CO 2 emissions remains largely understudied even though macroeconomic institutions can affect the economic entities' decision‐making, which in turn affects carbon emissions.…”