Exploring the Impacts of Banking Development, and Renewable Energy on Ecological Footprint in OECD: New Evidence from Method of Moments Quantile Regression

Abstract

Although previous related studies illustrate several factors that reduce and eliminate ecological pollution, empirical evidence that examines the impact of banking development on footprint ecological quality is missed. This study explores the impact of banking development, renewable energy consumption, and economic growth on the ecological footprint of 27 OECD countries spanning data from 1990 to 2018. Using the method of moments quantile regression (MMQR), the results indicated that a 1% increase in banking expansion is projected to augment the ecological footprint in the OECD nations across all quantiles (first to ninth). Thus, the results affirm that banking development dampens ecological sustainability in the OECD nations. In contrast, the results indicate that renewable energy promotes ecological sustainability in the OECD nations across all quantiles (first to ninth). The empirical findings suggest that OECD policymakers should regard banking and economic development as a green energy fostering mechanism while designing policies to promote ecological friend energy sources. Moreover, as part of their core mandates, central banks, and regulatory authorities should promote financial innovation in the banking sector to mobilize the required capital to facilitate nature conservation and restoration.