Modeling the natural resources and financial inclusion on ecological footprint: The role of economic governance institutions. Evidence from ECOWAS economies

This study investigates the heterogeneous effects in the context of the Economic Community of West African States (ECOWAS) and applied augmented mean group (AMG) and common correlated mean group (CCEMG) estimation and pooled mean group (PMG) for causality analysis from 1990 to 2016. The findings show that natural resources, financial inclusion, economic growth, and urbanization increase the entire panel's ecological pressure. Conversely, economic governance institutions, renewable energy consumption, and human capital reduce the ecological footprint on the ECOWAS economies. In addition, when interaction term is introduced, economic governance between natural resources abundance and financial inclusion on ecological footprint are favorable to the environmental sustainability by reducing the ecological footprint. The findings for country analysis reveal that natural resources decrease the quality of the environment in Camaron, Gambia, Nigeria and Senegal; for other countries, the impact is also positive but found insignificant. Hence, financial inclusion expedites the ecological footprint in Ghana, and Senegal. The study does not find a harmful effect on other countries. We further observe that economic governance is environmentally friendly and reduces ecological pressure in Cameroon, Gambia, Ghana, Nigeria, and Senegal. The study does not find such a relationship in other economies. Upon this paper's findings, several policy implications, limitations, and possible future research directions have been discussed.