Environmental Kuznets Curve Analysis of CO ₂ Emissions, Financial Development, and Economic Growth in Oman

This study investigates the dynamic relationship between carbon dioxide (CO 2 ) emissions, financial development, and economic growth in Oman from 1998 to 2022 within the framework of the Environmental Kuznets Curve (EKC) hypothesis. Using time series data from the World Bank, IMF, and Oman’s National Centre for Statistics and Information, the autoregressive distributed lag (ARDL) model is applied to evaluate both long-run and short-run interactions. Diagnostic tests, including Breusch–Godfrey, Breusch–Pagan–Godfrey, and Ramsey’s RESET, confirm the robustness of the model. The results reveal a cointegrating relationship, with economic growth and financial development exerting significant long-term impacts on CO 2 emissions. The error correction term indicates a 70% annual adjustment towards equilibrium, underscoring the dynamic nature of the linkage. Bidirectional causality is observed between CO 2 emissions, economic growth, and financial development. While economic diversification has contributed to short-term emission reductions, long-term sustainability requires enhanced green investment and renewable energy development. These research data provide fundamental knowledge that Gulf Cooperation Council region governments, along with national decision-makers in Oman, can use to handle economic progress without sacrificing environmental preservation.