Dynamic linkages between financial development, economic growth, urbanization, trade openness, and ecological footprint: an empirical account of ECOWAS countries

This study investigates the dynamic linkages between financial development, economic growth, urbanization, trade openness, and a more reliable environmental indicator (ecological footprint) in ten ECOWAS nations from 1980 to 2022. The study applied the Pedroni and Kao cointegration tests to confirm the equilibrium tie-in between the variables. The study used the pool mean group (PMG) method to draw empirical inferences. In addition, the study also employed the ordinary least square (OLS), Fully modified ordinary least square (FMOLS), and dynamic ordinary least square (DOLS) methods to confirm the robustness of the PMG estimates. The long-run estimates indicate that financial development, economic growth, and trade openness have a significant positive impact on the ecological footprint, while urbanization affects the ecological footprint negatively. The results of the country analysis reveal that financial development leads to a depletion in the ecological footprint in Sierra Leone, Togo, and Cote d’Ivoire, but it increases in Niger. Furthermore, we discover that economic development is not eco-friendly and increases the ecological footprint in Benin, Ghana, and Nigeria. We offer policy recommendations, discuss limitations, and suggest future research directions for our study.