Climate Change and Financial Technology Nexus in GCC Countries: Evidence from the Asymmetric ARDL Approach

While existing literature has explored the effects of financial technology on CO2 emissions, there has been limited research examining how variations in financial technology itself influence its impact on emissions. To supplement the shortness of existing literature, this paper empirically investigates the dynamic effects of economic growth, urbanization, and four dimensions of financial technology—mobile cellular technology, financial development, market development, and institutional development on CO2 emissions in the Gulf Cooperation Council (GCC) countries. The study utilizes annual time series data covering 24 years, from 2000 to 2023. To achieve the research objectives, a robust Auto-regressive Distributed Lag (ARDL) method was employed. The findings reveal a bidirectional causal relationship between CO2 emissions and economic growth, as well as between CO2 emissions and urbanization. Conversely, a one-way causal relationship was identified between financial development and financial institutions, and CO2 emissions. Based on these results, the study recommends that GCC countries promote renewable energy sources and low-carbon industries while gradually reducing reliance on fossil fuels. Additionally, this study suggested that policymakers focus on developing financial technology within their governments to facilitate the growth of a green economy and guide it towards an ecologically sustainable trajectory.