Financial development for energy access: Evidence from credit rationing and carbon emission in MENA region

The research aims to investigate the shifting pattern associated with domestic credit, carbon emissions, access to electricity, and financial development in the Middle East and North African (MENA) region from 2000 to 2021. This study employs a panel quantile regression to examine the impact of domestic credit, carbon emissions, and access to electricity on financial development at different levels of economic growth. A Dynamic ARDL modelling approach is employed to evaluate to assess the short- and long-term relationships between the variables. For robustness check, the study employs Kernel-Based Regularized Least Squares (KRLS) and Bayesian regression, findings indicate that domestic credit contributes a vital part in fostering financial development, irrespective of the state of the economy. Moreover, the impact of domestic credit is particularly strong in economies with lower levels of financial development. Access to electricity has varying effects, with a stronger influence on financial development in advanced economies, but a less significant impact in regions with underdeveloped infrastructure. Finally, in line with the Environmental Kuznets Curve (EKC) hypothesis, the non-linear influence of financial development in the MENA region has a negative influence on carbon emission and follows a U-shape curve, initially increasing emissions before leading to a reduction. This research provides a valuable insight for policymakers, financial institutions, and environmental agencies committed to advancing sustainable financial development in the MENA region.