The Influence of Islamic Financial Development, Political Stability, Economic Growth, and Urbanization on Environmental Quality in OIC Countries

This study aims to examine the effects of Islamic financial development, political stability, economic growth, and urbanization on environmental quality in the member countries of the Organization of Islamic Cooperation (OIC). The analysis utilizes data from the period 2013 to 2023 and investigates both marginal and dynamic interactions among the variables using econometric methods, including machine learning algorithms, Kernel Regularized Least Squares (KRLS), and Generalized Method of Moments (GMM). The findings indicate that economic growth contributes to environmental improvement under low-emission conditions but has a detrimental effect under high-emission scenarios. Political stability positively influences environmental quality in low-emission contexts, while it exerts a negative impact in high-emission settings. Urbanization generally helps reduce emissions; however, in high-emission regions, it increases environmental pressure. Islamic financial development is found to increase emissions on average, though it may contribute to emission reductions when implemented through environmentally friendly financial practices in low-emission contexts.