Financial Architecture, Government Effectiveness and Carbon Emission Risk in Foreign Capital Mobilization in Sub-Saharan Africa

Background Sub-Saharan Africa faces a persistent external-finance constraint that limits investment, employment, technology transfer and progress toward sustainable development. Rather than treating the regressors as separate determinant questions, this study investigates a broader empirical phenomenon: whether foreign capital systematically responds to domestic financial architecture, institutional credibility and environmental conditions in heterogeneous Sub-Saharan African economies. Methods Annual data for 44 Sub-Saharan African economies from 2004 to 2022 were analysed using a sequential panel design. Cross-sectional-dependence and slope-heterogeneity diagnostics motivate second-generation CIPS unit-root testing, Westerlund cointegration and heterogeneous estimation. CS-ARDL serves as the baseline estimator; CCEMG and AMG assess estimator robustness, System GMM addresses dynamic endogeneity concerns, panel quantile regression examines distributional heterogeneity and Dumitrescu-Hurlin tests assess Granger-predictive direction. Results Financial inclusion, the domestic-credit proxy interpreted conservatively as financial intermediation capacity, and government effectiveness are positively associated with both FDI and remittance inflows in the long run. In the FDI equation, the positive CO2 term and negative squared term indicate concavity. The implied turning point is approximately 28.0 metric tons of CO2 per capita, above the sample maximum of 9.814; therefore, the estimates do not establish a within-sample inverted-U reversal. Carbon emissions are negatively associated with remittances. Conclusions The results support a common pattern of foreign-capital responsiveness to domestic conditions, while the significant slope heterogeneity implies that reported coefficients are average heterogeneous effects rather than identical relationships for all SSA economies. Policy implications are therefore framed as evidence-consistent priorities rather than causal prescriptions.