Climate action is an alarming issue, and the world is concerned about sustainable solutions. Governance quality, financial technology and advanced-resource endowments have a pivotal role in climate action, yet the literature lacks evidence on their linkages with carbon emissions. The present study covers this gap in the literature for the Gulf Cooperation Council countries, as they offer an ideal study setting given their extreme vulnerability to climate change, their reliance on fossil fuels, the strong efforts to address climate change issues, and their prioritization of transforming the financial sector through financial technology as a means of resolving climate issues. Results show that governance quality and financial technology curb carbon emissions. Specifically, financial technology reduces CO2 emissions by approximately 36.4% in the FMOLS estimation, while governance quality contributes negatively and significantly to CO2 emissions across most specifications. Further, the interaction term of financial technology and advanced-resource endowments is statistically significant with a negative coefficient, hereby providing a supportive role in reducing CO2 emissions. Hence, advanced-resource endowments play a moderating role, transforming the effectiveness of financial technology in reducing carbon emissions. The findings are robust for quantile regressions and alternative measures of environmental degradation and have strong policy implications for the Gulf Cooperation Council countries.
Hanif et al. (Thu,) studied this question.