Resource efficiency and economic sustainability in APEC: Assessing the financial sector's role

Efforts by countries worldwide to enhance the efficiency of natural resources and mitigate environmental harm are driven by a multitude of policies across various dimensions. This paper aims to investigate the relationship between the financial sector and energy efficiency in 21 APEC member countries from 2000 to 2021. Employing the CUM-FM estimation, the study reveals significant insights. The results indicate that both the green financial market and the degree of financial openness have a positive impact on increasing the efficiency of natural resources. Moreover, the size of the economy (GDP) also demonstrates a positive correlation with resource efficiency. However, the effect of the economic uncertainty index and foreign direct investment on resource efficiency in APEC member countries is found to be unfavorable. To enhance resource efficiency, the examined countries are advised to focus on expanding digital green financial markets and fostering green foreign direct investment. Additionally, the establishment of an early warning system can play a crucial role in mitigating economic uncertainty.