Danubius International Conferences, International Conference Circular Economy: Opportunities and Challenges 2022

The impact of financial development and green innovation on environmental degradation

Muhammad Usman, Daniel Balsalobre Lorente, Alina Cristina Nuta
Last modified: 2022-11-17


Long-standing debates in the literature have centered on how financial development contributes to environmental quality or, conversely, leads to environmental degradation. In the broader context of the potential of economic growth to contribute to environmental regeneration, at least after a certain threshold is reached, the direct and indirect benefits of a strong financial infrastructure and regulations and open access to investment resources are highlighted. Green innovation and the use of renewable energy can also reduce the ecological footprint, according to previous studies. Furthermore, green innovation and renewable energy consumption are likely to reduce ecological footprints, according to previous studies. The goal of this study is to investigate how financial development, green innovations, renewable energy, and foreign direct investment affect environmental degradation in a panel of European emerging economies.