How do financial development and institutional quality influence greenhouse gases in the Next-11 economies?

The sustainable development goals of many nations are challenged by the need to reduce emissions, improve ecological integrity, and address the impacts on climatic alteration. The study examines how the financial innovation and institution quality effect environmental sustainability in NEXT-11 countries between 1995 and 2023. This study analyzes how financial growth and institutional quality affects CO 2 , N 2 O, and CH 4 emissions in Next-11 nations, filling research gaps through advanced econometrics and policy-focused findings. Based on the second-generation Panel ARDL method and further with robustness checks of DOLS and FMOLS, this research found that the financial innovation contributes to mitigating carbon emissions but affects other types of gases (N 2 O and CH 4 ) more complexly. The financial development decreases CO₂ emissions; it raises N 2 O emissions, though slightly, and reduces CH 4 emissions, so financial development does exert different impacts on different sectors. Conversely, we found that increases in institutional strength consistently had positive effects on environmental outcomes. Reductions in CO 2 , N 2 O, and CH 4 emissions were associated with increased governance and regulatory quality. Results reveal the significance of both financial innovation and institution quality in determining the environmental destiny of emerging economies. When economic growth is linked to strong institutions, it plays a deterrent role in emissions, highlighting the significance of sustainable finance and good governance for environmental degradation.