Digitalization and financial development contribution to the green energy transition in Malaysia: Findings from the BARDL approach

Abstract Digitalization has become a critical instrument in the struggle against pollution and has the potential to help society move toward a low‐carbon economy. However, how digitization affects the environment depends on how different economic actors collaborate and, consequently, interact with digitalization. In this regard, the current study investigates the role of digitalization in Malaysia's transition to green energy, a crucial strategy for curbing CO 2 emissions and combating climate change by using the Bayesian auto‐regressive distributed lags (BARDL) approach for a period from 2000 to 2021. The research empirically demonstrates the positive impact of the digitalization sector on the transition to green energy, notably, variables related to this transition were statistically significant. The main contribution of the study to the literature is to reveal the role of digitalization in the transition to green energy. The findings also offer practical policy recommendations, supporting the development of renewable energy sources and aiding in achieving zero‐carbon targets. The empirical findings provide valuable insights for decision makers, emphasizing the importance of aligning the European Union regulations for Malaysia's successful transition to digital green energy.