Unleashing the Environmental Impacts of Tourism and Eco-Technologies: Does Financial Stability Matters?

Abstract

Tourism-intensive economies face increasing environmental challenges because rapid tourism expansion, energy-intensive infrastructure, and growing urbanization continuously intensify ecological pressure. Despite the growing literature on tourism and environmental sustainability, limited attention has been given to the moderating role of financial stability in shaping the environmental effects of tourism and eco-technologies. This study therefore investigates how financial stability interacts with tourism and green innovation to influence environmental quality. Using panel data for the top 20 most visited economies over the period 2007-2024, the study employs the two-step System Generalized Method of Moments (System-GMM) estimator to address endogeneity and dynamic panel issues. The findings reveal that eco-technologies, financial stability, and economic globalization improve environmental quality, whereas tourism expansion deteriorates ecological sustainability. More importantly, the interaction results indicate that financial stability strengthens the positive environmental contribution of eco-technologies and mitigates the adverse environmental effects of tourism activities. These findings suggest that financially resilient economies are more capable of supporting sustainable tourism transformation and green technological transition. Therefore, policymakers should integrate green innovation strategies with stable financial systems to achieve long-term environmental sustainability.