Achieving carbon neutrality in West Africa: The impact of financial development and good governance

Abstract

Achieving a net zero carbon has been one of the main agendas for all state and non-state actors. The political system of developing countries sometimes makes both internal and external actors question their efforts toward the agenda. Therefore, this study contributes to previous literature in analyzing the empirical effect of financial development and governance quality on carbon emissions. The study covers sixteen West African countries with data from 1996 to 2021. The study employs the Generalized Method of Moments for the analysis. Financial development in all the models contributes to carbon emissions. However, the effect of governance quality indicators varies depending on the model and the indicator(s) used. Nevertheless, economic governance and political governance in most models contribute to environmental pollution, but institutional governance helps promote environmental quality. Renewable energy and economic growth promote environmental quality through carbon mitigation. However, trade openness promotes environmental pollution by encouraging the release of carbon emissions. Finally, relevant policy implications are proposed based on the empirical findings of the study.