Do Financial Inclusion, Regulatory Quality and Government Effectiveness Matter for Green Development? Evidence from New EU Countries

Authors

DOI:

https://doi.org/10.5755/j01.ee.36.3.34801

Keywords:

Financial Inclusion, Government Effectiveness, Regulatory Quality, Green Development, New EU Countries

Abstract

Nowadays, the world is facing climate change and environmental problems due to the increasing use of energy resources and environmental emissions. In order to promote green development, financial inclusion is an important factor in the development process. Therefore, this paper examines the effects of financial inclusion, regulatory quality, government effectiveness and economic growth on green development in the new EU countries for the period from 2004 to 2021. In order to obtain empirical results, the pooled mean group and mean group estimator have been employed to check the short-run and long-run effects on green development. The results show a strong relationship between the variables and CO2 emissions in the long run. The findings support that enhancing the level of financial inclusion and regulatory quality by 1% increases carbon emissions by around 0.3% and 0.4% in the long run. However, government effectiveness and economic growth have a negative effect on CO2 emissions in the long run, while in the short run economic growth has a positive effect on CO2 emissions. Based on the empirical results, policymakers should improve financial inclusion and reinforce stringent regulations to enhance green development.

Author Biographies

Tanja Fatur Šikić, Faculty of Tourism and Hospitality Management, University of Rijeka, Croatia

Tanja Fatur Šikić is PhD in Economics, Senior Assistant at the Faculty of Tourism and Hospitality Management, University of Rijeka (Croatia). Her main fields of research are energy economics, sustainable development, public finance and environmental regulations. She has worked at the regional government in the field of economics and real estate valuation. She has published several papers in respectable international scientific journals and received the EDAMBA award for the best dissertation and the award for scientific excellence. As part of her professional training, she has spent time at the Alpen-Adria University of Klagenfurt, Austria, and the National Institute of Financial Management, India.

Sabina Hodžić, Faculty of Tourism and Hospitality Management, University of Rijeka, Croatia

Sabina Hodžić is PhD in Economics, Associate Professor at the Faculty of Tourism and Hospitality Management, University of Rijeka (Croatia). Her main fields of research are public finance, international taxation issues, local and regional government, digital economy and green development. She lectures on public finance and international taxation and is the author of several papers published in scientific journals. She has participated in several academic research projects at home and abroad. As a part of her professional training, she has spent time at the Vienna University of Economics and Business (2021), University of New South Wales, Australia (2018), and University of Economics, Slovakia (2016).

Anita Čeh Časni, Faculty of Economics and Business, University of Zagreb, Croatia

Anita Čeh Časni is PhD in Economics, Associate Professor at the Faculty of Economics and Business, University of Zagreb (Croatia), President of the Croatian Statistical Association. Aside from teaching in both Croatian and international EPAS-accredited study programmes (BDiB), she is very active in her scientific field and has published numerous scientific papers in respectable international scientific journals. She recently became a director of the Institute for Euro-Asian Studies, thus promoting international cooperation between the Faculty of Economics and Business and Euro-Asian countries. Her research interests include applied statistical methods in tourism, macroeconomics and finance; panel data analysis; housing economics; sustainability and educational statistics.

Additional Files

Published

2025-06-30

Issue

Vol. 36 No. 3 (2025)

Section

Articles