Financial development and environmental sustainability in Nigeria: Does institutional environment matter?

Financial development and environmental sustainability in Nigeria: Does institutional environment matter? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Financial development and environmental sustainability in Nigeria: Does institutional environment matter? Titus Ayobami Ojeyinka, grace Nyonnoh Oje This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4558371/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Environmental sustainability has become a global agenda that every country strives to attain to promote prosperity and intergenerational wealth for the enhancement of human welfare and survival. It is against this backdrop that this study explores the effect of financial development on environmental sustainability as well as the moderating role of institutional quality on the nexus between the two variables. The study applies autoregressive distributed lags (ARDL) as the primary estimation technique while fully modified OLS and canonical cointegration regression are employed as robustness checks on the parameter estimates on annual data between 1986 and 2020. The study finds evidence of cointegration between environmental sustainability indicators and financial development. The outcomes from the baseline models suggest that financial development and weak institutional quality deteriorate environmental performance both in the short run and long run periods. However, additional findings from the paper affirm that institutional quality and financial development complement each other in promoting environmental sustainability in Nigeria. The results are consistent for the two indicators of environmental sustainability and robust to different estimation techniques. The study concludes that institutional quality plays a fundamental role by stimulating the favourable effect of financial development on environmental quality. Adjusted net savings ecological footprint financial development environmental sustainability Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4558371","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":337732042,"identity":"d2c1e84d-fb14-4ea8-9df2-bbb77d209287","order_by":0,"name":"Titus Ayobami Ojeyinka","email":"","orcid":"https://orcid.org/0000-0002-4007-7120","institution":"Obafemi Awolowo University","correspondingAuthor":false,"prefix":"","firstName":"Titus","middleName":"Ayobami","lastName":"Ojeyinka","suffix":""},{"id":337732043,"identity":"2866e3dc-eede-4517-b220-b29467709273","order_by":1,"name":"grace Nyonnoh Oje","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA/0lEQVRIiWNgGAWjYPACNgZ+ZsbGBx9ATHZitUi2NzcbzgAxmYm1x+DM8TZpHhCLkBb56MMPP3yo4JNjuJHYJm3za5s8HzMD44ePObi1GJ5LM5accYbNmHFGYrN1bt9twzZmBmbJmdvwaOlhMGPmbWNLbJZIbLyd23ObEaiFjZkXrxb2b8x/29jq2yQSG6Qte27bE9Qiz8NjxszYxpbAw3OwSZrhx+1EgloMeHiKJXvOsBnOYG9sNuxtuJ3cxszYjNcv8j3sGz/8qDgmb3+Y/eGDH39u285vbz744SM+Ww6AqWMQHmMbmGzArR5kC0S6Bsr9g1fxKBgFo2AUjFAAACuwTvwEj0ugAAAAAElFTkSuQmCC","orcid":"https://orcid.org/0009-0002-4611-214X","institution":"Obafemi Awolowo University Faculty of Social Sciences","correspondingAuthor":true,"prefix":"","firstName":"grace","middleName":"Nyonnoh","lastName":"Oje","suffix":""}],"badges":[],"createdAt":"2024-06-10 13:37:31","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4558371/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4558371/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":92124458,"identity":"22687a42-df59-491c-87c8-dbdd54a16de5","added_by":"auto","created_at":"2025-09-25 00:38:40","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":745296,"visible":true,"origin":"","legend":"","description":"","filename":"AnonymousJECS.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4558371/v1_covered_350d1b17-6dc3-4a10-b323-18ebc7037718.pdf"}],"financialInterests":"","formattedTitle":"Financial development and environmental sustainability in Nigeria: Does institutional environment matter?","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Adjusted net savings, ecological footprint, financial development, environmental sustainability","lastPublishedDoi":"10.21203/rs.3.rs-4558371/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4558371/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eEnvironmental sustainability has become a global agenda that every country strives to attain to promote prosperity and intergenerational wealth for the enhancement of human welfare and survival. 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