Financial Development and Environmental Quality: Emphasizing the Role of Population, Resource Abundance, and Technology (A Case Study of OPEC Member Countries)

A healthy environment is a fundamental pillar of sustainable development, playing a decisive role in both quality of life and economic growth. In this context, financial development can provide opportunities to enhance environmental quality by supporting clean technologies and efficient resource use, while simultaneously posing a threat by increasing energy consumption and pollutant emissions. This study examines the relationship between financial development and environmental quality, with a particular emphasis on the roles of technology, population, and resource abundance. In this research, environmental quality is measured using two indicators: carbon dioxide emissions and the ecological footprint, while energy intensity is considered a proxy for technological advancements. Data from 11 OPEC member countries, spanning the period 1990–2018, are analyzed using the Augmented Mean Group (AMG) method and the STIRPAT model. The findings indicate that financial development increases carbon dioxide emissions and the ecological footprint by coefficients of 0.106 and 0.093, respectively, thereby weakening environmental quality. Additionally, the results show that higher energy intensity, as a proxy for technology, reduces environmental quality, and increases in population and resource abundance similarly exert adverse effects. Causality tests confirm a bidirectional relationship between financial development and environmental quality. Based on these results, investing in clean technologies and reducing energy intensity can help improve environmental conditions in OPEC member countries.