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Examining the role of artificial intelligence, financial innovation, and green energy transition in enhancing environmental quality

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  • Majeed, Abdul
  • Xie, Yuantao
  • Gao, Chongyan
  • Du, Anna Min
  • Muniba,

Abstract

The growth of emerging economies has led to heightened environmental challenges, underscoring the importance of implementing sustainable technologies and clean energy transitions to alleviate the ecological consequences. Hence, this study explores the roles of Artificial Intelligence (AI), Financial Innovation (FI), and Green Energy Transition (GET) in improving environmental quality in emerging economies. The results are robust using advanced econometric techniques that account for cross-sectional dependence, heterogeneity, unit roots, and cointegration. We test short- and long-run relationships using the cross-sectional augmented autoregressive distributed lag (CS-ARDL) model and validate the results using feasible generalized least squares (FGLS) estimators. The findings indicated the roles of AI (−0.029), FI (−0.071), and GET (−0.144) in decreasing the ecological footprint and enhancing environmental quality. However, economic growth (0.337) contributes to an increased ecological footprint. These findings highlight that sustainable technologies, FIs, and clean energy transitions are necessary to address environmental issues and sustainable economic growth. These findings provide policymakers with valuable insights into the sustainable development of emerging economies.

Suggested Citation

  • Majeed, Abdul & Xie, Yuantao & Gao, Chongyan & Du, Anna Min & Muniba,, 2025. "Examining the role of artificial intelligence, financial innovation, and green energy transition in enhancing environmental quality," International Review of Economics & Finance, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:reveco:v:100:y:2025:i:c:s1059056025002552
    DOI: 10.1016/j.iref.2025.104092
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    1. Bergougui, Brahim, 2025. "Industrial robots for a sustainable future: Uncovering the asymmetric effects of AI on ecological quality in G7 economies," Technology in Society, Elsevier, vol. 83(C).
    2. Chen, Jingming & Zhao, Xiaojie & Zheng, Suhang & Zhou, Danni & Cheng, Xuanmei, 2026. "Higher education, fintech, and regional entrepreneurship: Insights from China's innovation ecosystem," Research in International Business and Finance, Elsevier, vol. 84(C).
    3. Zheng, Ye & Bao, Xuhan & Zhao, Shijie, 2025. "Renewable energy policy and environmental governance performance," Finance Research Letters, Elsevier, vol. 82(C).
    4. Shi, Lelai & Lin, Hong & Tan, Bing, 2025. "The impact of the coupling coordination between new-type urbanization and the digital economy on ecological efficiency," International Review of Financial Analysis, Elsevier, vol. 105(C).
    5. Pan, Yuyao & Guo, Xiaochuan, 2025. "Digital technology innovation, entrepreneurship and high-quality corporate development," Finance Research Letters, Elsevier, vol. 82(C).
    6. Guan, Tong & Zheng, Rui & Chen, Aoyun, 2026. "Artificial intelligence and corporate energy consumption: The policy effects of the new-generation artificial intelligence innovation and development pilot zones," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 148-164.
    7. Lu, Jian & Wang, Congcong & Xie, Tangkun & Zhang, Xueying, 2025. "FinTech and corporate pollution reduction," Research in International Business and Finance, Elsevier, vol. 80(C).

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