Does financial inclusion, renewable and non-renewable energy utilization accelerate ecological footprints and economic growth? Fresh evidence from 15 highest emitting countries

The current study seeks to investigate both, the determinants of ecological footprint and economic growth to explore the effectiveness of financial development, renewable and non-renewable energy utilization in reducing the ecological footprint level and boost the economic growth during the period from 1990 to 2017 for 15 highest emitting countries. This study verifies the presence of cross-sectional dependency by utilizing second-generation tests for robust estimation. The results of augmented mean group (AMG) estimation approach revealed that financial development, renewable energy and trade openness significantly contribute to overcome the environmental degradation, while economic growth and non-renewable energy utilization are more responsible for the environmental damages. Moreover, in growth function, financial development, renewable and non-renewable energy utilization significantly promote the economic growth. Additionally, Dumitrescu and Hurlin (D-H) non-causality test revealed that there exists bidirectional causality between financial development, economic growth, renewable energy utilization and ecological footprint. However, unidirectional causality is running from non-renewable energy and trade openness to ecological footprint. Furthermore, in growth function, financial development and non-renewable energy confirm the feedback hypothesis and unidirectional causal relationship exists from economic growth to renewable energy and trade openness. Finally, some policy suggestions and future research directions are also discussed for these economies.