Unraveling the Complexity of E-Government, Financial System Development, and Environmental Sustainability: Evidence From Developing Economies in the Digital Era

Policymakers are showing growing interest in how digital governance and financial systems can jointly support environmental objectives. This research analyzes their combined impact on carbon emissions by applying a dynamic panel approach to data from 76 developing economies spanning 2003–2020. As far as we know, it is the first study to examine how the evolution of e-government (EGOV) influences the link between financial growth and ecological performance. The results reveal that while EGOV contributes to reducing carbon emissions, financial development (FD) independently exerts a positive impact. However, their interaction yields a nonlinear and significantly negative effect, highlighting the complex systemic dynamics involved. These findings are further validated through the disaggregated analysis of individual EGOV components. The study concludes that leveraging the synergy between FD and robust digital governance can enhance environmental sustainability in developing economies. These insights underscore the need for a systemic and complexity-aware approach to policy design aimed at achieving sustainable development.