Early-stage entrepreneurship and environmental sustainability: the role of financial institutions

Purpose This study examines the effect of entrepreneurship on carbon emissions and the moderating role of financial institutions (FI). While prior studies have examined various determinants of carbon emissions, the interaction between entrepreneurship and FI across quantiles of the emissions distribution remains underexplored. Design/methodology/approach Using data from 1995 to 2022, this study employed the Method of Moments Quantile Regression (MMQR) analysis approach to examine the linkage between entrepreneurship, FI and carbon emissions across quantiles. Findings The findings reveal that entrepreneurship has a positive impact on carbon emissions across quantiles, while FI show a significant adverse effect. The interaction between FI and entrepreneurship reveals a stronger positive effect from lower to higher quantiles, indicating that FI intensify the emission-inducing effects of entrepreneurial activities, with the effect being more pronounced at upper emission levels. Practical implications The findings suggest that policymakers should focus on strengthening FI' capacity to guide entrepreneurial ventures toward sustainable practices through targeted green financing mechanisms and environmental risk assessment frameworks. Originality/value This research contributes to the literature by examining the interactive effects of entrepreneurship and FI on carbon emissions across different emission quantiles. The study addresses a significant gap in understanding how FI moderate the environmental impact of entrepreneurial activities at varying emission levels.