Published Online:December 2025
Product Name:The IUP Journal of Financial Risk Management
Product Type:Article
Product Code:IJFRM011225
DOI:10.71329/IUPJFRM/2025.22.4.5-28
Author Name:Manikandan C
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:5-28
This study investigates the impact of institutional quality on carbon emissions in Sub-Saharan Africa (SSA), with particular attention to the moderating role of the 2015 Paris Agreement on climate change. A panel dataset comprising 41 SSA economies from 2010 to 2023 is utilized. Institutional quality is measured using a composite index, while carbon emissions are represented by CO2 emissions per capita. The analysis employs a fixed-effects panel regression model as the primary estimation method, with robustness checks conducted using bootstrapped estimations and system generalized method of moments (system-GMM). Endogeneity concerns are addressed through Durbin-Wu-Hausman tests. To evaluate the influence of global policy, a difference-indifferences (DID) framework compares pre- and post-Paris Agreement on Climate Change intervention periods. The findings indicate that higher institutional quality is associated with reduced carbon emissions in SSA, underscoring the significance of strong institutional quality for environmental outcomes. The DID results suggest that the Paris Agreement enhanced the effectiveness of IQ by strengthening accountability and policy coherence, particularly in countries with higher governance standards. Subregional analyses further demonstrate that robust institutions yield stronger mitigation effects. This research contributes novel empirical evidence from a relatively understudied region by integrating governance, emissions, and international policy frameworks.
Climate change represents one of the most pressing global challenges of the twenty-first century, threatening ecosystems, human wellbeing, and the sustainability of economic development. The growing concentration of greenhouse gases (GHGs) in the atmosphere, particularly carbon dioxide (CO2), has intensified extreme weather patterns, sea level rise, and biodiversity loss, with disproportionate impacts on vulnerable regions (Maji et al., 2023; Serdeczny et al., 2017).