Environmental consequences of the mediating role of technology on financial development in convergent patterns: New insights from the environmental Kuznets curve

• The existence of a Kuznets curve with the dominant role of technology was confirmed in the countries studied. • Technology enhances the impact of financial market development on environmental improvement. • Technology plays a fundamental role in preserving the environment. Many previous studies have examined various factors that determine environmental sustainability within the framework of the environmental Kuznets curve. However, there is insufficient empirical evidence on the environmental consequences of financial sector development with the role of technology. To fill this gap, this study attempts to examine the effects of financial development on CO₂ emissions from the technology channel within the framework of the environmental Kuznets curve in convergent patterns in technology. In this way, first, the convergent countries are classified in technology among 75 countries with the Club Convergence approach. Next, the model's analysis of how financial development affects CO₂ emissions in model (1) using the method of cross-sectional autoregressive distributed lag (CS-ARDL) is investigated. Furthermore, model (2) analyzes the consequences of financial development on CO₂ emissions through the lens of technology. The empirical findings of this study confirm the existence of a technology-dominated environmental Kuznets curve in convergent countries. In addition, the results showed that technology enhances the impact of financial market development on environmental improvement. Some things about the novelty of this research are worthy of consideration: First, this study defines the new channel (technology) of financial development's effects on CO₂ emissions within the framework of the environmental Kuznets curve with new insight. Second, the use of country convergence criteria to select a panel of countries. Thirdly, using the new panel method of cross-sectional autoregressive distributed lag (CS-ARDL) helps to provide strong and reliable results.