Does Financial Development Affect Environmental Degradation? Evidence from the OECD Countries

2017 ◽  
Vol 26 (8) ◽  
pp. 1162-1180 ◽  
Author(s):  
George E. Halkos ◽  
Michael L. Polemis
Keyword(s):  
Financial Development ◽  
Environmental Degradation ◽  
Oecd Countries

Asymmetric Impact of Institutional Quality on Environmental Degradation: Evidence of the Environmental Kuznets Curve

2021 ◽  
Vol 13 (22) ◽  
pp. 12507
Author(s):  
Farrah Dina Abd Razak ◽  
Norlin Khalid ◽  
Mohd Helmi Ali
Keyword(s):  
Financial Development ◽  
Environmental Degradation ◽  
Environmental Kuznets Curve ◽  
Energy Use ◽  
Institutional Quality ◽  
Kuznets Curve ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Lag Model ◽  
New Guidelines

This paper aims to discover the asymmetry impacts and co-integration between gross domestic product, financial development, energy use and environmental degradation by featuring institutional quality covering the Malaysia economy during the period from 1984 until 2017 using a nonlinear auto-regressive distributed lag model. The results confirm the existence of the Environmental Kuznets Curve hypothesis for both linear and nonlinear analyses, thus verifying the relevance of symmetric and asymmetric EKC hypotheses for Malaysia. Further, this study verifies the attributes of financial development and institutional quality that mitigates the concern on CO2 emissions, but contradicting results were produced on energy use. The implication of this finding provides new guidelines for Malaysia authorities to consider the asymmetries in formulating environment-related policies to maintain environmental quality and achieve their sustainable development goals.

THE VANISHING EFFECT OF FINANCE ON ECONOMIC DEVELOPMENT

2019 ◽  
pp. 1-43
Author(s):  
Klaus Gründler
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Financial Development ◽  
Productivity Growth ◽  
Oecd Countries ◽  
Growth Effect ◽  
Factor Productivity ◽  
Average Effect ◽  
Innovation Projects ◽  
New Ideas

This paper examines the mechanisms that determine the “vanishing effect of finance” on economic growth found in recent studies. Based on both current (171 countries, 1960–2014) and historical (21 OECD countries, 1870–2009) data, the results show that financial development promotes growth in poorer countries by increasing education and investment, and by decreasing fertility. The relevance of these transmission channels declines when countries become richer. The growth effect of the financial sector in high-income countries primarily depends on new ideas and potentials for innovation projects. Consequently, the major decline in factor productivity growth since the early 2000s has contributed to the reduction in the financial sector’s average effect on growth.

The impact of economic and financial development on environmental degradation

2015 ◽  
Vol 32 (4) ◽  
pp. 485-502 ◽  
Author(s):  
Samia Nasreen ◽  
Sofia Anwar
Keyword(s):  
Panel Data ◽  
Financial Development ◽  
Environmental Degradation ◽  
Low Income ◽  
Ordinary Least Squares ◽  
Dynamic Panel Data ◽  
High Income ◽  
Empirical Literature ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this study is to validate the impact of economic and financial development along with energy consumption on environmental degradation using dynamic panel data models for the period 1980-2010. The study uses three sub-panels constructed on the basis of income level to make panel data analysis more meaningful. Design/methodology/approach – Larsson et al. panel cointegration technique, fully modified ordinary least squares and vector error correction model causality analysis are applied for empirical estimation. Findings – Main empirical findings demonstrate that financial development reduces environmental degradation in the high-income panel and increases environmental degradation in the middle- and low-income panels. Hypothesis of the environmental Kuznets curve is accepted in all income panels. Granger causality results show the evidence of bidirectional causality between financial development and CO2 emission in the high-income panel, and unidirectional causality from financial development to CO2 emission in the middle- and low-income panels. Originality/value – In empirical literature, only a few studies explain the effect of financial development on environment. The present study is an effort to fill this gap by exploring the effect of economic and financial development on environmental degradation.

The impact of financial development, economic growth and energy consumption on environmental degradation

2015 ◽  
Vol 26 (5) ◽  
pp. 666-682 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri ◽  
Geetilaxmi Mohapatra
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Financial Development ◽  
Environmental Degradation ◽  
Series Data ◽  
Development Economic ◽  
Content Type ◽  
Indian Economy ◽  
Long Run ◽  
The Impact

Purpose – The purpose of this paper is to investigate the impact of financial development, economic growth and energy consumption on environment degradation for Indian economy by using the time series data for the period 1971-2011. Design/methodology/approach – The stationary properties of the variables are checked by ADF, DF-GLS, PP and Ng-Perron unit root tests. The long-run relationship is examined by implementing the Autoregressive Distributed Lag bounds testing approach to co-integration and error correction method (ECM) is applied to examine the short-run dynamics. The direction of the causality is checked by VECM framework and variance decomposition is used to predict exogenous shocks of the variables. Findings – The empirical evidence confirms the existence of long-run relationship among the variables. Financial development appears to increase environmental degradation in India. The main contributors to environmental degradation are: economic growth, energy consumption financial development and urbanization. The results also lend support to the existence of environmental Kuznets curves for Indian economy. Research limitations/implications – The present study suggests that environmental degradation can be reduced at the cost of economic growth or energy efficient technologies should be encouraged to enhance the domestic product with the help of financial sector by improving environmental friendly technologies from advanced economies. Originality/value – This paper proposes to make a contribution to the existing literature through examining the relationship between financial development and environmental degradation in Indian economy during 1971-2011 by employing modern econometric techniques.

The role of financial development and corruption in environmental degradation of Sub-Saharan African countries

2020 ◽  
Vol 31 (4) ◽  
pp. 895-913 ◽  
Author(s):  
Nura Sani Yahaya ◽  
Mohd Razani Mohd‐Jali ◽  
Jimoh Olajide Raji
Keyword(s):  
Financial Development ◽  
Environmental Degradation ◽  
Empirical Studies ◽  
Ordinary Least Squares ◽  
Efficient Technology ◽  
African Countries ◽  
Credit Allocation ◽  
Content Type ◽  
Sub Saharan

PurposeThis study examines the role of financial development and its interaction with corruption in the environmental degradation of eight Sub-Saharan African countries from 2000–2014.Design/methodology/approachThe study utilizes Pedroni cointegration and fully modified ordinary least squares (FMOLS) techniques for the estimation of the models.FindingsThe results of the cointegration test reveal that there exist long-run relationships among the variables in the model with the interaction of financial development and corruption, and in the model without interaction. The FMOLS estimates show that in the former model, the interaction of financial development with corruption is positively significant in determining the level of environmental degradation in those countries. Moreover, in the latter, financial development, trade openness, and corruption have a positive effect on their environmental degradationResearch limitations/implicationsUnavailability of data, the study was limited to only eight Sub-Saharan African nationsPractical implicationsThe finding that financial development and its interaction with corruption have an adverse effect on the environments of the Sub-Saharan African countries implies the need to focus on how efficient credits are being allocated in those countries. For better management of environmental quality, this may require the implementation of policies that enhance credit allocation to users with energy-efficient technology and appliances that promote the quality of environments. In addition, stringent policies could be embarked upon to curtail all acts of corruption in the region for an efficient credit allocation and a better environment in the development of Sub-Saharan African society.Originality/valueThe dearth in empirical studies on the Sub-Saharan African countries motivates this study. In particular, little is known about the interaction effect of corruption and financial development on the environmental degradation of those countries, as the work on this is limited in the existing literature.

scholarly journals Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

2020 ◽  
Vol 12 (18) ◽  
pp. 7812 ◽  
Author(s):  
Farhan Ahmed ◽  
Shazia Kousar ◽  
Amber Pervaiz ◽  
José Pedro Ramos-Requena
Keyword(s):  
Financial Development ◽  
Environmental Degradation ◽  
Environmental Sustainability ◽  
Trade Openness ◽  
Institutional Quality ◽  
Bounds Testing ◽  
Long Run ◽  
Auto Regressive ◽  
Negative Shock

The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial development, institutional quality, and environmental degradation. Third, the study examines the asymmetric relationship between financial development, institutional quality, and environmental sustainability. For this purpose, the study utilized the data of Pakistan from 1996 to 2018. The study applied Augmented Dickey–Fuller (ADF), Phillips Parron (PP) and Zivote, and Andrews unit root test to check the properties of stationarity of the data. This study applied the Auto Regressive Distributive Lags (ARDL) model to investigate symmetric relationships while the Non-Linear Auto Regressive Distributive Lag Model (NARDL) approach is utilized to investigate the asymmetric relationship among variables. ARDL bounds testing approach utilized to investigate long-run co-integration while short-run dynamics have been investigated by applying the error correction method (ECM). This study found the significant long-run symmetric and asymmetric association of institutional quality (IQ) and financial development (FD) with environmental degradation (ED) and environmental sustainability. However, IQ- has an insignificant association with environmental sustainability. Moreover, dynamic multiplier analysis indicates that positive shock to FD and IQ has a stronger impact on environmental degradation while a positive or negative shock to FD; both have a stronger impact on environmental sustainability. However, a positive or negative shock to IQ has a smaller impact on environmental sustainability. Moreover, the study also found a significant long-run symmetric association of trade openness with environmental degradation and environmental sustainability. This study suggests that the quality of institutions, financial development, and trade openness is necessary to enhance the quality of the environment.

THE RELATIONSHIP BETWEEN CO2 EMISSIONS AND FINANCIAL DEVELOPMENT

2015 ◽  
Vol 60 (05) ◽  
pp. 1550117 ◽  
Author(s):  
JOE-MING LEE ◽  
KU-HSIEH CHEN ◽  
CHIN-HO CHO
Keyword(s):  
The Netherlands ◽  
Co2 Emissions ◽  
Financial Development ◽  
Energy Use ◽  
Oecd Countries ◽  
Cross Sectional ◽  
Eu Countries ◽  
Cross Sectional Dependence ◽  
The Relationship ◽  
The U.S

This paper examines the relationships among CO2 emissions, energy use, GDP, and financial development for 25 OECD countries over the 1971–2007 period. From the results of the panel FMOLS and the cross-sectional dependence regression, we do not find any support for the existence of the EKC for OECD countries. Moreover, the results present that the coefficient of financial development to CO2 emissions is negative and statistically significant for eight countries (Austria, Denmark, Germany, Ireland, the Netherlands, Norway, Portugal, and the U.S.). The findings of this study thus show that financial development can help EU countries to adjust their CO2 emissions.

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