Greening the recovery: Natural resource sustainability and carbon assessment for financial development

The rapid industrialization and urbanization in China have driven an unparalleled expansion of the economy. Nevertheless, this expansion has resulted in adverse consequences, namely, the deterioration of the environment and the significant increase in carbon emissions. This study examines the correlation between the sustainability of natural resources, carbon emissions, and the progress of financial development in China from 2000 to 2021. We utilize an econometric model to examine the interrelationships and patterns of change among these variables. Our study findings revealed a substantial inverse relationship exists between the sustainability of natural resources and carbon emissions in China. Enhancements in the sustainability of natural resources typically lead to reduced carbon emissions. The advancement of financial systems is essential in reducing carbon emissions. The development of the financial industry promotes investment in environmentally friendly technologies and sustainable practices, decreasing carbon emissions. The study establishes a reciprocal relationship between the advancement of financial systems and the long-term viability of natural resources. Enhanced financial development fosters improved stewardship of natural resources, hence bolstering sustainability. During the analyzed timeframe, China has significantly improved in implementing environmentally friendly measures in its economic recovery efforts. Implementing policies designed to foster sustainability and mitigate carbon emissions has produced favorable outcomes. The results emphasize the significance of ongoing initiatives to advance the sustainability of natural resources and foster economic growth in China. Policymakers should prioritize implementing strategies that enhance the financial system's robustness while promoting sustainable behaviors.