IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i13p10663-d1188224.html
   My bibliography  Save this article

Unraveling the Interrelationship of Digitalization, Renewable Energy, and Ecological Footprints within the EKC Framework: Empirical Insights from the United States

Author

Listed:
  • Najia Saqib

    (Department of Finance, College of Business Administration, Prince Sultan University, Riyadh 11586, Saudi Arabia)

  • Ivan A. Duran

    (Department of Finance, College of Business Administration, Prince Sultan University, Riyadh 11586, Saudi Arabia)

  • Ilhan Ozturk

    (College of Business Administration, University of Sharjah, Sharjah 27272, United Arab Emirates
    Faculty of Economics, Administrative and Social Sciences, Nisantasi University, Istanbul 3410, Turkey
    Department of Medical Research, China Medical University Hospital, China Medical University, Taichung 40402, Taiwan)

Abstract

The study seeks to better comprehend the ecological footprint of the United States by analyzing the effects of digital financial inclusion (FinTech) as well as renewable and non-renewable energy usage. Data from 2005 Q1 to 2020 Q4 were analyzed using the quantile autoregressive lag (QARDL) method. It also used Granger causality in quantiles to analyze the correlation between variables and draw conclusions about their relative importance. Quantile-wise, the error correction parameter is statistically significant with the predicted negative sign, as shown by the results obtained using the QARDL method. Indications are mounting that the relationship between these variables and the United States’ ecological footprint is returning to its long-term equilibrium. However, in the long/short-run period, across all quantiles, economic growth and consumption of non-renewable energy have a positive impact on the ecological footprint. The environmental Kuznets curve (EKC) theory was also examined, which holds that an inverted U-shaped link exists between economic growth and environmental degradation. The QARDL study’s findings corroborated the presence of an EKC in the US, lending credence to the theory that while economic growth at first promotes environmental deterioration, further progress ultimately promotes environmental improvement. The study additionally checked the results of the QARDL test for robustness using the ARDL approach. Recommendations for public policy are included in the paper for consideration by legislators and policymakers.

Suggested Citation

  • Najia Saqib & Ivan A. Duran & Ilhan Ozturk, 2023. "Unraveling the Interrelationship of Digitalization, Renewable Energy, and Ecological Footprints within the EKC Framework: Empirical Insights from the United States," Sustainability, MDPI, vol. 15(13), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10663-:d:1188224
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/13/10663/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/13/10663/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cho, Jin Seo & Kim, Tae-hwan & Shin, Yongcheol, 2015. "Quantile cointegration in the autoregressive distributed-lag modeling framework," Journal of Econometrics, Elsevier, vol. 188(1), pages 281-300.
    2. Sinha, Avik & Sengupta, Tuhin & Kalugina, Olga & Gulzar, Muhammad Awais, 2020. "Does distribution of energy innovation impact distribution of income: A quantile-based SDG modeling approach," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    3. Korhan Gökmenoğlu & Nigar Taspinar, 2016. "The relationship between Co 2 emissions, energy consumption, economic growth and FDI: the case of Turkey," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(5), pages 706-723, August.
    4. Mateusz Jankiewicz & Elżbieta Szulc, 2021. "Analysis of Spatial Effects in the Relationship between CO 2 Emissions and Renewable Energy Consumption in the Context of Economic Growth," Energies, MDPI, vol. 14(18), pages 1-16, September.
    5. Robalino-López, Andrés & Mena-Nieto, Ángel & García-Ramos, José-Enrique & Golpe, Antonio A., 2015. "Studying the relationship between economic growth, CO2 emissions, and the environmental Kuznets curve in Venezuela (1980–2025)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 602-614.
    6. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    7. Galvao Jr., Antonio F., 2009. "Unit root quantile autoregression testing using covariates," Journal of Econometrics, Elsevier, vol. 152(2), pages 165-178, October.
    8. Gang Liu, 2004. "Estimating Energy Demand Elasticities for OECD Countries. A Dynamic Panel Data Approach," Discussion Papers 373, Statistics Norway, Research Department.
    9. Stijn Claessens & Jon Frost & Grant Turner & Feng Zhu, 2018. "Fintech credit markets around the world: size, drivers and policy issues," BIS Quarterly Review, Bank for International Settlements, September.
    10. Troster, Victor & Shahbaz, Muhammad & Uddin, Gazi Salah, 2018. "Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis," Energy Economics, Elsevier, vol. 70(C), pages 440-452.
    11. Berger, Allen N, 2003. "The Economic Effects of Technological Progress: Evidence from the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(2), pages 141-176, April.
    12. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
    13. Mark Grinblatt & Francis A. Longstaff, 2000. "Financial Innovation and the Role of Derivative Securities: An Empirical Analysis of the Treasury STRIPS Program," Journal of Finance, American Finance Association, vol. 55(3), pages 1415-1436, June.
    14. Beck, Thorsten & Chen, Tao & Lin, Chen & Song, Frank M., 2016. "Financial innovation: The bright and the dark sides," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 28-51.
    15. Bilgili, Faik & Koçak, Emrah & Bulut, Ümit, 2016. "The dynamic impact of renewable energy consumption on CO2 emissions: A revisited Environmental Kuznets Curve approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 838-845.
    16. Salahuddin, Mohammad & Alam, Khorshed & Ozturk, Ilhan, 2016. "The effects of Internet usage and economic growth on CO2 emissions in OECD countries: A panel investigation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 1226-1235.
    17. Eyup Dogan & Syed Faisal Shah, 2021. "Analyzing the Role of Renewable Energy and Energy Intensity in the Ecological Footprint of the United Arab Emirates," Sustainability, MDPI, vol. 14(1), pages 1-12, December.
    18. Wang, Shaojian & Zeng, Jingyuan & Liu, Xiaoping, 2019. "Examining the multiple impacts of technological progress on CO2 emissions in China: A panel quantile regression approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 103(C), pages 140-150.
    19. Haider Mahmood & Tarek Tawfik Yousef Alkhateeb & Muhammad Tanveer & Doaa H. I. Mahmoud, 2021. "Testing the Energy-Environmental Kuznets Curve Hypothesis in the Renewable and Nonrenewable Energy Consumption Models in Egypt," IJERPH, MDPI, vol. 18(14), pages 1-17, July.
    20. Shahbaz, Muhammad & Nasir, Muhammad Ali & Roubaud, David, 2018. "Environmental degradation in France: The effects of FDI, financial development, and energy innovations," Energy Economics, Elsevier, vol. 74(C), pages 843-857.
    21. Shafik, Nemat & Bandyopadhyay, Sushenjit, 1992. "Economic growth and environmental quality : time series and cross-country evidence," Policy Research Working Paper Series 904, The World Bank.
    22. Shahiduzzaman, Md. & Layton, Allan, 2015. "Changes in CO2 emissions over business cycle recessions and expansions in the United States: A decomposition analysis," Applied Energy, Elsevier, vol. 150(C), pages 25-35.
    23. Shahbaz, Muhammad & Kumar Tiwari, Aviral & Nasir, Muhammad, 2013. "The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa," Energy Policy, Elsevier, vol. 61(C), pages 1452-1459.
    24. Setareh KATIRCIOGLU, 2017. "Investigating the Role of Oil Prices in the Conventional EKC Model: Evidence from Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(5), pages 498-508.
    25. Sadorsky, Perry, 2012. "Information communication technology and electricity consumption in emerging economies," Energy Policy, Elsevier, vol. 48(C), pages 130-136.
    26. Roger Koenker & Zhijie Xiao, 2004. "Unit Root Quantile Autoregression Inference," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 775-787, January.
    27. Thomas Puschmann & Christian Hugo Hoffmann & Valentyn Khmarskyi, 2020. "How Green FinTech Can Alleviate the Impact of Climate Change—The Case of Switzerland," Sustainability, MDPI, vol. 12(24), pages 1-30, December.
    28. Soytas, Ugur & Sari, Ramazan, 2009. "Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member," Ecological Economics, Elsevier, vol. 68(6), pages 1667-1675, April.
    29. Syed Kumail Abbas Rizvi & Bushra Naqvi & Fatima Tanveer, 2018. "Is Pakistan Ready to Embrace Fintech Innovation?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 23(2), pages 151-182, July-Dec.
    30. Robert C. Merton, 1992. "Financial Innovation And Economic Performance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 4(4), pages 12-22, January.
    31. Arshian Sharif & Najia Saqib & Kangyin Dong & Syed Abdul Rehman Khan, 2022. "Nexus between green technology innovation, green financing, and CO2 emissions in the G7 countries: The moderating role of social globalisation," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1934-1946, December.
    32. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
    33. Setareh KATIRCIOGLU, 2017. "Investigating the Role of Oil Prices in the Conventional EKC Model: Evidence from Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(5), pages 498-508, May.
    34. Houston, Joel F. & Lin, Chen & Lin, Ping & Ma, Yue, 2010. "Creditor rights, information sharing, and bank risk taking," Journal of Financial Economics, Elsevier, vol. 96(3), pages 485-512, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adel Ben Youssef & Mounir Dahmani, 2024. "Assessing the Impact of Digitalization, Tax Revenues, and Energy Resource Capacity on Environmental Quality: Fresh Evidence from CS-ARDL in the EKC Framework," Sustainability, MDPI, vol. 16(2), pages 1-23, January.
    2. Xinlin Liao & Yu Zhang & Xinyu Wang & Ruijia Yuan, 2023. "Digitalization Level and Green-Oriented Transition Development of Highly Energy-Intensive Enterprises Based on Carbon Reduction Perspective," Sustainability, MDPI, vol. 15(21), pages 1-19, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tao, Ran & Su, Chi-Wei & Naqvi, Bushra & Rizvi, Syed Kumail Abbas, 2022. "Can Fintech development pave the way for a transition towards low-carbon economy: A global perspective," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    2. Sharif, Arshian & Baris-Tuzemen, Ozge & Uzuner, Gizem & Ozturk, Ilhan & Sinha, Avik, 2020. "Revisiting the role of renewable and non-renewable energy consumption on Turkey’s ecological footprint: Evidence from Quantile ARDL approach," MPRA Paper 100044, University Library of Munich, Germany.
    3. Lee, Chi-Chuan & Li, Xinrui & Yu, Chin-Hsien & Zhao, Jinsong, 2021. "Does fintech innovation improve bank efficiency? Evidence from China’s banking industry," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 468-483.
    4. Beck, Thorsten & Chen, Tao & Lin, Chen & Song, Frank M., 2016. "Financial innovation: The bright and the dark sides," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 28-51.
    5. Ben Lahouel, Béchir & Taleb, Lotfi & Ben Zaied, Younes & Managi, Shunsuke, 2021. "Does ICT change the relationship between total factor productivity and CO2 emissions? Evidence based on a nonlinear model," Energy Economics, Elsevier, vol. 101(C).
    6. Mumin Atalay Cetin & Ibrahim Bakirtas, 2020. "The long-run environmental impacts of economic growth, financial development, and energy consumption: Evidence from emerging markets," Energy & Environment, , vol. 31(4), pages 634-655, June.
    7. Bouznit, Mohammed & Pablo-Romero, María del P., 2016. "CO2 emission and economic growth in Algeria," Energy Policy, Elsevier, vol. 96(C), pages 93-104.
    8. Razzaq, Asif & Wang, Yufeng & Chupradit, Supat & Suksatan, Wanich & Shahzad, Farrukh, 2021. "Asymmetric inter-linkages between green technology innovation and consumption-based carbon emissions in BRICS countries using quantile-on-quantile framework," Technology in Society, Elsevier, vol. 66(C).
    9. Atif Jahanger & Yang Yu & Ashar Awan & Muhammad Zubair Chishti & Magdalena Radulescu & Daniel Balsalobre-Lorente, 2022. "The Impact of Hydropower Energy in Malaysia Under the EKC Hypothesis: Evidence From Quantile ARDL Approach," SAGE Open, , vol. 12(3), pages 21582440221, July.
    10. Zambrano-Monserrate, Manuel A. & Silva-Zambrano, Carlos A. & Davalos-Penafiel, Jose L. & Zambrano-Monserrate, Andrea & Ruano, Maria Alejandra, 2018. "Testing environmental Kuznets curve hypothesis in Peru: The role of renewable electricity, petroleum and dry natural gas," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 4170-4178.
    11. Destek, Mehmet Akif & Manga, Muge, 2020. "Technological Innovation, Financialization and Ecological Footprint: Evidence from BEM Economies," MPRA Paper 114151, University Library of Munich, Germany.
    12. Wang, Wei & Rehman, Mubeen Abdur & Fahad, Shah, 2022. "The dynamic influence of renewable energy, trade openness, and industrialization on the sustainable environment in G-7 economies," Renewable Energy, Elsevier, vol. 198(C), pages 484-491.
    13. Álvarez-Herránz, Agustín & Balsalobre, Daniel & Cantos, José María & Shahbaz, Muhammad, 2017. "Energy Innovations-GHG Emissions Nexus: Fresh Empirical Evidence from OECD Countries," Energy Policy, Elsevier, vol. 101(C), pages 90-100.
    14. Shahbaz, Muhammad & Sinha, Avik, 2019. "Environmental Kuznets Curve for CO2 emission: A survey of empirical literature," MPRA Paper 100257, University Library of Munich, Germany, revised 2019.
    15. Acheampong, Alex O., 2019. "Modelling for insight: Does financial development improve environmental quality?," Energy Economics, Elsevier, vol. 83(C), pages 156-179.
    16. Alvarez-Herranz, Agustin & Balsalobre-Lorente, Daniel & Shahbaz, Muhammad & Cantos, José María, 2017. "Energy innovation and renewable energy consumption in the correction of air pollution levels," Energy Policy, Elsevier, vol. 105(C), pages 386-397.
    17. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    18. Le Hoang Phong, 2019. "Globalization, Financial Development, and Environmental Degradation in the Presence of Environmental Kuznets Curve: Evidence from ASEAN-5 Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 40-50.
    19. Karaaslan, Abdulkerim & Çamkaya, Serhat, 2022. "The relationship between CO2 emissions, economic growth, health expenditure, and renewable and non-renewable energy consumption: Empirical evidence from Turkey," Renewable Energy, Elsevier, vol. 190(C), pages 457-466.
    20. Balsalobre-Lorente, Daniel & Shahbaz, Muhammad & Roubaud, David & Farhani, Sahbi, 2018. "How economic growth, renewable electricity and natural resources contribute to CO2 emissions?," Energy Policy, Elsevier, vol. 113(C), pages 356-367.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10663-:d:1188224. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.