The role of debt burden, green financing, and energy efficiency in reducing carbon footprints in MINT & BRICS economies: New evidence from panel QARDL method

Abstract

The study examines the impact of debt burden, green financing, energy efficiency, and electrification on environmental sustainability in MINT and BRICS countries from 1990 to 2022. Using the Panel Quantile Autoregressive Distributed Lag (QARDL) model estimator, the analysis also includes robustness checks without control variables. The findings reveal that green financing, FDI, and energy efficiency reduce the carbon footprint, whereas debt burden, electrification, and GDP growth increase it in the short run, particularly in low- to mid-quantiles. Notably, the effect of debt burden is positive in the short run but becomes negative in the long run. The interaction terms highlight that the combined effects of energy efficiency and debt burden amplify the carbon footprint, while the interaction of green financing and electrification with debt suggests a cleaner energy transition when resources are efficiently allocated. These findings imply that green financing can effectively reduce the carbon footprint in MINT and BRICS nations, especially in the presence of economic growth and consistent FDI inflows. However, without economic growth and FDI, the debt burden in the MINT and BRICS economies tends to worsen the carbon footprint. The study recommends increasing green financing in renewable energy projects, energy-efficient appliances, sustainable transportation, green bonds, and climate change mitigation initiatives.