New infrastructure construction is often regarded as a win-win engine for economic growth and environmental improvement. However, does this digital development necessarily translate into green dividends? By examining China as a representative economy, this study challenges this prevailing perception. Using panel data from 30 Chinese provinces over the period 2011–2022 and employing the generalized method of moments estimation, this study investigates the relationship between new infrastructure construction and green high-quality development, with a particular focus on the moderating role of digital finance. Our findings reveal a significant negative correlation between new infrastructure construction and green high-quality development, while the introduction of digital finance can significantly mitigate this adverse impact. Through a multidimensional indicator system decomposition, the study confirms this inhibitory effect and the moderating mechanism across different types of new infrastructure construction and dimensions of digital finance, though the intensity of moderation varies. Across different dimensions of green high-quality development, digital finance positively moderates the impact of new infrastructure construction on the driving, state, impact, and response dimensions, while exhibiting a negative moderating effect on the pressure dimension. Furthermore, the moderating role of digital finance is significantly stronger in central-western regions and areas with weaker environmental regulation. Therefore, relying solely on the construction of new infrastructure cannot automatically achieve green transformation. Policymakers must simultaneously promote the development of digital finance, particularly by increasing support for central-western regions and optimizing its synergy with environmental regulation, to address the green paradox in digital transformation.
Expanding the adoption of clean cooking fuels and technologies is central to achieving multiple Sustainable Development Goals in Africa, yet progress towards this goal remains persistently slow. While environmental taxation is widely promoted as a market-based instrument to discourage polluting fuels and technologies, its effectiveness in low-income, biomass-dependent environments is theoretically ambiguous and empirically underexplored. This study examines how environmental taxes influence clean cooking adoption across 14 African nations over the period 2000–2021, using a suite of distribution-sensitive econometric techniques, including quantile correlation, method of moments quantile regression, and quantile-based causality analysis. These methods are further complemented by robustness checks based on Driscoll-Kraay fixed effects and fully modified ordinary least squares estimators. The findings reveal a striking and consistent pattern: environmental taxes do not promote transition to clean cooking, instead, they exert a significantly negative effect across the entire distribution of adoption levels. This adverse effect is strongest among countries with low adoption, where structural constraints such as limited access to modern fuels, weak infrastructure, and reliance on freely collected biomass undermine the price-based incentives embedded in taxation. Income emerges as a powerful and robust enabler of adoption, particularly in low-access settings, while a high rural population share constitutes a persistent structural barrier. In contrast, the influence of natural resource depletion is weak and non-systematic across estimation approaches. Overall, the results point to a fundamental limitation of environmental taxation as a standalone policy tool in low-income settings.
Can trust make factories more productive? Using data from Chinese listed manufacturing firms between 2012 and 2021, we apply a Double/Debiased Machine Learning (DML) approach to obtain robust estimates of the policy effect of China’s Construction of Social Credit System (CSCS) pilot policy on labor productivity. We find that firms located in CSCS pilot cities experience significantly higher labor productivity. This gain is not driven by capital deepening or skill-biased labor substitution, but reflects genuine industrial upgrading. Further analysis reveals two key mechanisms: internally, the improved credit environment enhances governance by optimizing asset allocation; externally, it strengthens incentives through better access to subsidies and an improved business climate. We also provide evidence that social trust may exert moral restraint on managers and generate long-term incentives, while its productivity effects may vary across regions. These findings highlight the powerful role of informal institutions such as social trust in boosting manufacturing productivity and fostering sustainable economic growth.
Do equity incentives truly drive corporate environmental engagement, or do they merely create the appearance of it? This question has important implications for executive compensation design and corporate sustainability. Using a panel dataset of Chinese A-share listed firms from 2009 to 2023, this study examines how executive equity incentives (EEIs) affect corporate environmental engagement (CEE), measured by green technological innovation and ESG (environmental, social, and governance) performance. We find that EEIs significantly promote CEE, and this result remains robust after addressing endogeneity with an instrumental-variable approach and conducting multiple robustness checks. Mechanism analysis shows that EEIs enhance executives’ green cognition and promote green governance practices, thereby translating incentive alignment into substantive environmental action. Heterogeneity analyses reveal that the effect is stronger among non-state-owned firms, firms with lower capital market attention, heavily polluting firms, firms facing stricter environmental regulation, and firms in less competitive markets. Further analysis shows that EEIs reduce ESG greenwashing, indicating that equity incentives promote genuine environmental engagement rather than symbolic disclosure. These findings provide new evidence on the role of executive compensation in corporate sustainability and offer implications for compensation design, green governance, and ESG disclosure supervision.
This study examines the relationship between financial development and environmental sustainability in 106 developing economies over the period 2000–2024. It uses the IMF Financial Development Index and a composite Environmental Sustainability Index (ENSI) constructed from CO₂ emissions, PM2.5 pollution, methane, and nitrous oxide emissions. The empirical analysis applies System GMM and Spatial Autoregressive GMM (SAR-GMM) to capture both dynamic and spatial effects. The results show that financial development is associated with higher environmental degradation. Financial inclusion improves environmental outcomes, while financial market depth and efficiency increase environmental stress. The SAR-GMM results confirm the presence of spatial spillovers in environmental outcomes. Spatial dependence is further supported by Local Moran’s I, which reveals significant clustering in environmental performance across countries. This indicates strong cross-country interdependence. The key novelty of this study lies in jointly integrating System GMM, SAR-GMM, and Local Moran’s I within a unified empirical framework, allowing simultaneous examination of dynamic effects, spatial spillovers, and clustering patterns in the financial development-environment nexus. Policy implications highlight the need to promote green finance, expand inclusive financial systems, and strengthen regional coordination to address interconnected environmental challenges.
The effects of religiosity on organizational behavior have become a topic of interest in the fields of management and religion. However, whether religiosity is associated with green-related innovation has not been explored, and the underlying economic channels remain unclear. This study addresses this gap by conceptualizing both regional religiosity and industry peer effects as distinct dimensions of informal institutions that jointly shape corporate green innovation. Using Chinese listed companies in 2020 as research subjects and employing a spatial econometric model, this study systematically tests these relationships. A positive link between religiosity and green-related innovation in firms is observed, and a positive peer effect on green innovation is also identified. To reveal the economic channel, the mediating role of business performance is tested. The results clearly indicate that business performance mediates the link between religiosity and green innovation in firms: regional religiosity fosters a pro-social business environment that enhances business performance, which in turn provides the resources necessary for green innovation. Furthermore, this association is shown to be heterogeneous, with the effect being pronounced in non-state-owned enterprises but muted in state-owned enterprises, where managerial atheism may offset religious norms. Evidence is provided by this study that religion, as an informal institution, is conducive to firms’ green innovation, and the understanding of the role of informal institutions in shaping corporate environmental strategy in transitional economies is deepened.
Exchange rate volatility creates uncertainty about export revenues and may discourage firms from international trade participation. However, existing evidence on how exchange rate uncertainty affects different trade margins remains fragmented, and limited attention has been paid to whether financial linkages can shape these effects. This study examines how exchange rate volatility influences the extensive and intensive margins of trade and the moderating role of bilateral financial linkages. Estimating a gravity model with the Poisson Pseudo-Maximum Likelihood estimator on bilateral trade data for 171 countries over 2001–2023, the results show that exchange rate volatility significantly reduces bilateral export market shares, especially along the extensive margin and in trade between developing countries. In addition, deeper bilateral portfolio investment linkages, particularly in equity and short-term debt markets, considerably weaken these adverse effects. These findings highlight the importance of exchange rate stability and stronger financial connections in supporting more resilient trade relationships.
This paper examines how corruption acts as a structural barrier to the development of the green bond market, using panel data from 74 countries between 2013 and 2023. Green bonds are evolving as a critical instrument for financing sustainable projects, but their adoption remains uneven across countries. We show that Corruption appears to have a pronounced effect on green bond issuance in middle-income (developing) countries, whereas it has little to no effect in high-income (developed) countries. Furthermore, our results show that institutional quality significantly influences this association. Corruption's negative effects are more noticeable in economies with poorer political stability, less effective governments, and a weaker regulatory framework. This suggests that institutional fragility heightens investor concern and jeopardizes sustainable funding initiatives. Additionally, our results remain strong and significant when we employ instrumental-variable (2SLS) and propensity-score matching (PSM) methods to control for potential endogeneity and capture the correlational pattern. These findings confirm that, even after controlling for potential endogeneity and sample selection bias, there is a significant negative association between corruption and the issuance of green bonds that persists.
This study examines whether early-life institutional shocks have persistent effects on household entrepreneurship. Using harmonized data from the China Family Panel Studies and the historical setting of China’s Send-Down Movement, we find that individuals with send-down experience are significantly less likely to engage in household entrepreneurship. The baseline estimate indicates a 3.6
This study examines the structure and dynamics of financial networks in an emerging market context by constructing Granger causality-based linkages among ten Turkish sectoral equity indices and four macroeconomic variables over the period May 2015 to May 2025 (2,487 trading days). The analysis aims to identify key sources of systemic vulnerability and characterize transmission mechanisms within the financial system. The findings indicate that the resulting macroeconomically driven network structure differs markedly from those documented in advanced economies. The model demonstrates strong predictive performance, achieving 94–96
The emergence of financial openness has been another force that has fundamentally changed the restructuring dynamics around developing economies, with cross-border capital flows, ownership transfers and merger acquisition (M A) activity increasingly speeding up the process. Although financial liberalisation has become more important, little evidence exists regarding the impact of financial openness on M A-driven corporate restructuring in developing countries under different institutional conditions. In order to address this gap, the study examines the direct, moderating, and non-linear effects of financial openness on corporate restructuring in 25 developing economies over the period 2000–2023. Employing panel-data methods using Fixed Effects (FE), Random Effects (RE) and dynamic System Generalised Method of Moments (System GMM) estimations, the paper examines how financial openness, institutional quality and macroeconomic stability determine M A-based restructuring behaviour. The results show that corporate reorganisation is facilitated by financial openness, through greater access to international sources of financing and more cross-border acquisitions. The results also show that institutional quality positively moderates this relationship, suggesting that better governance, investor protection and regulatory quality enhance the potential gains from restructuring openness. Yet, the analysis also detects an important non-linear effect, which indicates that too much openness leads to a higher vulnerability to speculative capital flows and macroeconomic volatility, which decreases long-term sustainability issues in restructuring. This study integrates the macro-financial liberalisation literature with the micro-corporate transformation literature in a single empirical framework, contributing to our understanding of global consolidation and financial globalisation processes. The results encourage the “smart openness” strategy that combines progressive liberalisation with institution building, macroprudential regulation and governance reforms. These findings have important implications for policymakers, financial regulators, and corporate strategists who are working to enhance sustainable restructuring and long-term economic resilience in developing economies.
This paper investigates asymmetry and nonlinearity in the effect of remittance inflows on financial development in India for the period 1980 to 2021. We analyze whether financial development is susceptible to varying degrees of remittance inflows. The results obtained using the autoregressive distributed lag (ARDL) model reveal a U-shaped relationship between remittances and financial development in the long run, i.e., remittances initially exert a negative impact on financial development, but upon surpassing a threshold level (1.22
The growing interaction between artificial intelligence (AI), clean energy, and dirty energy markets has created new channels of systemic risk that cannot be captured by linear or mean-based frameworks. This study examines the nonlinear and quantile-dependent volatility spillovers across these markets over the period 2018–2025 using a Quantile-on-Quantile Connectedness (QQC) approach, which allows spillovers to vary across market states and over time. The results reveal a strongly asymmetric and state-dependent transmission structure. AI-related assets are associated with the strongest net transmitting positions in volatility connectedness, particularly in upper-tail and high volatility regimes. Clean energy markets are more frequently observed in net receiving positions in the short run, but their connectedness profiles become more net transmitting over longer horizons as green-transition dynamics strengthen. Dirty energy assets are more often associated with net receiving and weaker outward spillover positions during turbulent periods while generating relatively weaker feedback effects under normal conditions. Dynamic evidence further shows that connectedness intensifies sharply during major global disruptions, especially the COVID-19 pandemic and the Russia-Ukraine conflict, confirming that tail-related spillover patterns are more pronounced within the connectedness structure. Overall, the findings show that volatility linkages between innovation and energy markets are nonlinear, time-varying, and highly regime-specific. These results provide important implications for portfolio diversification, hedging strategies, and policy coordination in an increasingly interconnected financial system.
This study investigates house price dynamics in Türkiye using monthly data for 55 cities and 87 districts over the period 2010–2022. Employing a three-stage empirical framework, we first detect exuberant episodes using Generalized Sup Augmented Dickey-Fuller (GSADF) and backward Sup ADF (BSADF) right-tailed unit root tests at both the city and district levels. We then analyze co-explosivity among the five largest cities (Istanbul, Ankara, Izmir, Bursa, and Antalya) using logistic regression models. Finally, we explore the drivers of bubble formation across 55 cities using panel logistic regression models. The results indicate that most cities and districts experienced synchronized explosive house price increases across three periods: 2013–2015, 2017–2018, and 2020–2022. The 2021–2022 period saw the most widespread bubbles, particularly in the western and Marmara regions than in the eastern part of the country, indicating a clear regional asymmetry in housing market dynamics. The evidence suggests that housing price exuberance was more synchronized in the largest urban markets. The panel logistic regression analysis revealed that new house sales were associated with bubble formation. In contrast, mortgage-financed sales and higher mortgage rates reduced the likelihood of bubbles, highlighting the stabilizing role of credit costs. Macroeconomic shocks from the COVID-19 pandemic and low interest rates were key drivers of bubble dynamics. These findings suggest that housing market stability requires locally targeted macroprudential and credit policies to prevent local and global shocks.
Today's economies operate under more complexity and more uncertainty than the ones standard growth models were built to describe. What drives GDP growth in that environment is the question this paper takes up. The setting is a panel of 117 countries from 1996 to 2021, and the four candidate drivers are economic complexity, human capital, governance quality, and uncertainty. A two-way fixed-effects specification is estimated on the full sample. The same specification is then re-estimated on two sub-samples—28 developed and 89 developing economies—so that the point estimates can be compared directly. Three findings stand out. The first is on uncertainty, which depresses growth in every specification considered. The estimated drag is larger in developed economies and this is consistent with the higher level of financial integration in advanced economies translating uncertainty more quickly into investment and hiring decisions. The second finding concerns governance. In the developed-economy sample, it is the political-stability and voice-and-accountability content of governance that drives the estimated growth effect, not the broader bundle of administrative quality and rule of law that the standard single-composite measure picks up. Standard practice would have missed this distinction. The third finding concerns economic complexity. Its estimated effect on growth is negative in the developing-economy sub-sample, reflecting the short-run structural-adjustment costs of moving up the complexity ladder for countries that are still some distance from the frontier. A long list of robustness checks—including a specification that adds lagged log GDP to control for conditional convergence—leaves the main qualitative findings intact and reveals that the human-capital coefficient grows substantially in magnitude and becomes statistically significant once convergence is included on the right-hand side. The implications for policy are context-specific. Stability and the safeguarding of political institutions are the binding priorities in advanced economies. Basic governance reform and staged complexity upgrading are the priorities in developing ones.
This study focuses on the determinants of clean energy capacity (CEC) in 68 developing countries over the span from 2001 to 2023 and specifically examines the role of governance quality (GQ). Employing System Generalized Method of Moments to address endogeneity and dynamic effects, feasible generalized least squares and method-of-moments quantile regression to address robustness and distributional heterogeneity, the study also examines the impact of green finance (GF), financial development (FD), and information and communication technology (ICT) on CEC. The results demonstrate that GF is the most consistent and robust driver of CEC, underscoring its central role in driving renewable investments. ICT also exerts a positive effect, reflecting the importance of digital infrastructure, while FD demonstrates a conditional impact, becoming effective primarily under stronger governance conditions. Conventional economic factors, such as economic growth, trade openness, and foreign investment, have mixed effects; furthermore, heterogeneity and distributional analyses indicate that the impacts of GF, ICT, and FD differ across various GQ levels and stages of clean energy development. These findings support the need to organize financial, technological, and institutional environments to accelerate the expansion of renewable energy in developing economies.
The study investigates how remittance outflows influence environmental quality in the world’s top ten remittance-sending economies, while accounting for financial innovation, energy transition, trade openness, natural resource rents, and economic growth. Using annual data from 1990 to 2023, we apply second-generation panel techniques—including the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) model and the AMG and CCEMG estimators—to address cross-sectional dependence, heterogeneity, and potential endogeneity. The results reveal a stable long-run relationship among the variables. Remittance outflows do not exert a significant impact on CO₂ emissions, suggesting that outflow-related income leakage does not directly translate into environmental pressure in host countries. In contrast, energy transition consistently reduces emissions, highlighting the importance of renewable energy adoption. Financial innovation and trade openness increase emissions, indicating that credit expansion and global integration remain tied to carbon-intensive activities. Natural resource rents and economic growth exhibit context-dependent effects across models. Robustness checks using developed–developing subsamples confirm the stability of these findings. Overall, the study provides new cross-country evidence on the remittance–environment nexus and underscores the need for policies that align financial innovation, trade structures, and remittance-related capital flows with long-term decarbonization goals.
Greenhouse gas (GHG) emissions pose a major challenge to environmental sustainability, particularly in developing countries where large informal sectors operate beyond formal regulatory frameworks. This study investigates the impact of the informal economy on GHG emissions measured by carbon dioxide (CO₂) and methane (CH₄), and examines whether governance quality, specifically control of corruption and good governance moderates this relationship. Using a balanced panel dataset of 107 developing countries covering the period 1996–2020, we employ the System GMM estimator to address endogeneity, dynamic persistence, and unobserved heterogeneity. To further validate the robustness of the results, we complement the analysis with the Lewbel IV-2SLS estimator. The empirical results reveal that a larger informal economy significantly increases both CO₂ and CH₄ emissions. In contrast, stronger governance quality directly reduces emissions and weakens the pollution-enhancing effect of the informal economy, indicating a substitutive relationship between governance quality and the informal economy. Additional heterogeneity analysis shows that the informal economy increases emissions across all income groups, with stronger direct effects in low- and lower-middle-income countries, while the moderating role of governance quality is more pronounced in upper-middle-income countries. These findings highlight the critical role of governance quality in shaping environmental outcomes and suggest that strengthening corruption control, improving government effectiveness, and promoting gradual economic formalization are essential policy strategies for reducing emissions and advancing environmental sustainability in developing countries.
Financial inclusion (FI) and renewable energy consumption (REC) are important drivers of long-term economic resilience, and it is essential to understand the nexus between these dual objectives to align inclusive financial systems with global sustainability targets. The paper investigates the impact of FI on REC using a large sample of 81 countries. Based on triennial data from the Global Findex Database, we construct three FI indices and, employing a quantile regression (QR) approach, the role of these FI indices in promoting sustainable energy consumption is investigated, while controlling for selected macroeconomic determinants of REC. The empirical findings show a negative relationship between FI indices and REC, which could suggest that expanded financial services may facilitate greater reliance on conventional energy sources before the transition to renewable energy sources. This relationship should be interpreted with caution, as it may reflect transitional factors, rather than a direct causal effect. Moreover, we highlight that the impact of FI on REC is not uniform across all levels of REC, meaning that distributional heterogeneity of REC should be considered in the process of ensuring access to finance. Overall, the negative and statistically significant relationship observed in upper quantiles between FI and REC indicates that, while FI is crucial for economic growth, without targeted policies or incentives towards renewable energy, it might lead to a higher reliance on conventional energy sources, rather than a shift towards greener alternatives. The results are robust to alternative methodologies and subsample analysis and strive to offer insights for policymakers, investors, and stakeholders.
The logistics and transportation industries are key pillars of sustainable development. However, the long-term viability of a logistics-economics-transport framework is a matter of concern for carbon emissions in developing countries. The study assesses the synergistic effect of green logistics, transportation infrastructure, trade, and economic growth on transportation-related CO₂ (TCO₂) emissions in developing countries. The study uses robust econometric approaches to examine the distributional heterogeneity, long-term causal dynamics, and heterogeneous causality from 1995 to 2023. The result reveals that green logistics and trade mitigate TCO₂ emissions by enabling digital logistics services and infrastructure, fostering technological dispersion, and raising supply chain efficiency. However, transportation infrastructure and economic growth trigger emissions levels due to structural carbon-dependent transport and economic systems. The finding emphasizes the necessity of a meticulous framework wherein information and communication technology-driven green logistics practices, transport energy transitions, and environmentally aligned trade-economic policies are reconsidered. Therefore, cross-sector efforts are essential to integrate alternative transport energy, adapt technology-based logistics, and enhance intermodal transport connectivity toward low-carbon transportation pathways.
