Financial sector development, energy consumption, and CO2 emission in Turkey. Fresh evidence from a new combined co-integration and Bootstrap ARDL tests

The major purpose of this paper is to investigate the influence of financial sector development, renewable and non-renewable energy consumption on CO-(2) emissions in Turkey. Autoregressive Distributed Lag testing model (ARDL), the Dynamic Ordinary Least Squares (D-OLS), Fully Modified Ordinary Least Square (FM-OLS), Canonical Cointegrating Regression(CCR) approaches are utilized to test a long-run interaction among the examined variables. To provide new empirical evidence, the study utilizes the newly developed bootstrap(ARDL) testing approach as proposed by (McNown et al. 2018), and the newly developed combined co-integration of Bayer and Hanck as proposed Bayer and Hanck (2013). The long-run coefficients of ARDL, D-OLS, FM-OLS, and CCR show that the ECK model is valid in Turkey. Besides, the findings show that financial sector development has a powerful influence on CO-(2) emission in Turkey. Furthermore, the findings demonstrate that non-renewable energy increases CO-(2) emission. In contrast, renewable energy can decrease CO-(2) emissions. The findings of this research provide valuable conclusions and recommendations for Turkey heading to sustainable and green economic growth. It is suggested that the government policymakers in Turkey are required to make more investment in renewable technologies to decrease CO-(2) emission.