Financial Efficiency and Its Impact on Renewable Energy Demand and CO 2 Emissions: Do Eco-Innovations Matter for Highly Polluted Asian Economies?

The analysis aims to examine the impact of eco-innovation and financial efficiency on CO₂ emissions and renewable energy consumption in highly polluted Asian economies, including China, India, Russia, and Japan. For empirical analysis, we have applied the ARDL pooled mean group (ARDL-PMG) model. The long-run estimated coefficient of environmental innovations is positively significant in both renewable energy models and negatively significant in the CO₂ emissions model. These results imply that environmental innovations help facilitate renewable energy consumption and reduce CO₂ emissions. On the other side, the estimates of financial development are insignificant in both renewable energy and CO₂ emissions models. However, the estimates of financial institution efficiency and financial markets are positively significant in both renewable energy and CO₂ emissions models, implying that financial institutions and market efficiency increase renewable energy consumption and decrease CO₂ emissions. [ABSTRACT FROM AUTHOR]