Examining the Role of Artificial Intelligence, Financial Innovation, and Green Energy Transition in Enhancing Environmental Quality

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.

Citation

Majeed, A., Xie, Y., Gao, C., Du, A. M., & Muniba. (2025). Examining the Role of Artificial Intelligence, Financial Innovation, and Green Energy Transition in Enhancing Environmental Quality. International Review of Economics and Finance, 100, Article 104092. https://doi.org/10.1016/j.iref.2025.104092

• Journal Article Type: Article
• Acceptance Date: Mar 31, 2025
• Online Publication Date: Apr 1, 2025
• Publication Date: 2025-06
• Deposit Date: Apr 16, 2025
• Publicly Available Date: Apr 16, 2025
• Journal: International Review of Economics & Finance
• Print ISSN: 1059-0560
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 100
• Article Number: 104092
• DOI: https://doi.org/10.1016/j.iref.2025.104092
• Keywords: Artificial intelligence, Financial innovation, Green energy transition, Ecological footprint, Environmental quality, Emerging economies
• Public URL: http://researchrepository.napier.ac.uk/Output/4230479