Harnessing the synergistic impacts of financial structure, industrialization, and ecological footprint through the lens of the EKC hypothesis. Insights from Pakistan

In this era of globalization, each nation endeavors to attain sustainable growth by addressing environmental challenges. In recent decades, extensive human activities have significantly depleted natural resources, and the ecological footprint provides an effective measure to evaluate this impact. Therefore, by accounting for industrialization, urbanization, and export diversification and covering the dataset of Pakistan from 1985 to 2022, this research thoroughly analyzes the connection between financial structure and ecological impact. Another concern with the existing study is that most previous studies neglect the importance of the ecological footprint when assessing the financial structure as a source of environmental change. The dynamic Autoregressive Distributed Lag (DARDL) approach was applied to ascertain the empirical results. The findings indicate that financial structure exhibits an inverted U-shaped pattern in relation to the ecological footprint. It signifies that a pragmatic financial structure diminishes the ecological footprint. Moreover, industrialization and urbanization upsurge the ecological footprint while export diversification decreases. In the future, the government's duty to promote sustainable development should be reinforced by using eco-friendly technologies to ensure the proper sinking of financial resources and bolstering the role of the financial system in supporting sustainable development.