Natural resources, technological progress, and ecological efficiency: Does financial deepening matter for G-20 economies?

This study examines the impact of natural resource dependence, technological progress, and financial deepening on ecological efficiency, mainly focusing on how the financial deepening moderates the influence of natural resource dependence and technological progress on ecological efficiency of 28 selected G-20 countries during 1985-2017. We employ a panel quantile regression (PQR) estimator to yield heterogeneous results across diversified levels of ecological efficiency for G-20 economies. The keystone findings are: Firstly, the bootstrap cointegration uncovers a long-run relationship among our study variables. Secondly, natural resource dependence and technological progress decelerate ecological efficiency for all quantiles. Thirdly, financial deepening de-celerates the ecological efficiency for lower and middle quantiles while accelerating the same for the upper quantiles. Fourthly, financial deepening negatively moderates the influence of natural resource dependence and technological progress on the ecological efficiency for the lower and middle quantiles, while it positively moderates the same for the upper quantiles. Finally, a unidirectional causality originates from moderation terms to ecological efficiency, while all other variables establish a bidirectional causal linkage with ecological effi-ciency. Based on empirical results, policies are suggested.

Automated summary

This study examines the impact of natural resource dependence, technological progress, and financial deepening on ecological efficiency and finds that financial deepening plays a significant role in moderating the influence of natural resource dependence and technological progress on ecological efficiency.