Does financial development reduce environmental degradation? Evidence from a panel study of 129 countries

Natural gas consumption-economic output and environmental sustainability target in China: an N-shaped hypothesis inference

On one divide, energy types have been linked with the varying degree of environmental damage. Another perspective argued on the severity of the damaged base on per capita and/or population consumption pattern. As such, this study investigates the nexus of per capita natural gas consumption-carbon dioxide emissions and per capita income-carbon dioxide emissions in the case of the People of the Republic of China. This study objectively expanded to illustrate whether the N-shaped environmental Kuznets curve hypothesis holds in the case of China or not. The employed autoregressive distributed lag bound testing approach incorporated additional explanatory variables (urbanization) within the N-shaped EKC hypothesis over the period 1971-2018. Importantly, the results show an evidence of inverted N-shaped EKC relationship. In addition, the study posits a positive relationship between natural gas consumption and carbon dioxide emissions and between urbanization and carbon dioxide emissions. Thus, the study proposes renewable energy development and decongestion of the urban centers as a means of controlling global warming.

The Environmental Effects of International Trade in China: Measuring the Mediating Effects of Technology Spillovers of Import Trade on Industrial Air Pollution

China is in a strategic phase of an industrial green transformation. Industrial air pollution is a key environmental target for governance. Because import trade is a core channel through which advanced environmental protection technology is absorbed, the question of whether technology spillovers brought about by import trade can reduce industrial air pollution emissions is a topic worth exploring. This paper uses a generalized spatial two-stage least-square (GS2SLS) model to explore the impact of import trade technology spillovers on industrial air pollution emission intensities using panel data from 30 provinces and cities between 2000 and 2017. Economic scale, industrial structure, and technological innovation are used as intermediary variables to test whether they play mediating effects. The results show that: (1) capital and intermediate goods technology spillovers directly reduce industrial air pollution emission intensity and (2) import trade technology spillovers indirectly reduce emission intensities by expanding economic scale, optimizing industrial structure, and enhancing technological innovation through mediating variables. Furthermore, industrial structure optimization and technological innovation have the largest mediating effects on industrial SO2, while economic expansion has the most significant mediating effect on industrial smoke and dust. The mediating effects of technology spillovers from intermediate goods exceed those of capital technology spillovers. Finally, industrial air pollution emission intensity demonstrates both spatial agglomeration and time lag effects. Environmental regulations and energy structure are shown to increase industrial air pollution emissions, while urbanization and foreign direct investment reduce industrial air pollution. Based upon these research results, some pertinent policy implications are proposed for China.

Financial development, international trade, and environmental degradation: a nonlinear threshold model based on panel smooth transition regression

Environmental degradation has severely affected the natural cycle of ecosystem. It's high time now and humans should execute strategies effectively to protect the further degradation. Initially, we need to understand the ways that might affect the environment. Thus, existing research is designed to explore the nonlinear association between financial development (FD) and carbon dioxide emissions (CO2) in the context of low-income countries by employing the yearly data of 1990-2016. The panel smooth transition regression model (PSTR) is applied, and the result confirmed that the nexus between the two variables are nonlinear. Moreover, it also shows that at a low regime, FD increases the CO2 emissions but as the economy of low-income states progress to the high regime, the association between the two variables becomes negative and significant. The study also confirms that FD can reduce CO2 emissions once it reaches a certain threshold point. Based on these findings, new insights are provided for the policymakers, and several policies are suggested to improve the environmental quality in low-income countries.

Sustainability of the Moderating Role of Financial Development in the Determinants of Environmental Degradation: Evidence from Turkey

One of the questions that remain unanswered in the literature on determinants of carbon emissions is the moderating effect of “financial development”. This becomes imperative, owing to the connection of carbon emissions to environmental degradation, which is considered to be one of the main challenges to sustainable development. Thus, this study investigated the moderating role of financial development in the determinants of carbon emissions for Turkey during the period of 1960 to 2016. Zivot–Andrew and Lee–Strazicich “unit root tests” were utilized to investigate the stationarity properties of the series. The cointegration among the variables employed was examined by utilizing the ARDL bounds test and Bayer–Hanck cointegration test. In contrast, the long-run causal relationship of the variables with carbon emissions was examined by using fully modified ordinary least square (FMOLS), dynamic OLS (DOLS), and Canonical Cointegrating Regression (CCR). The empirical findings reveal the significance of “economic growth”, “capital formation”, “energy consumption”, “urbanization”, and “financial development” as determinants of environmental degradation in Turkey. The study also found the significant moderating role of “financial development” in the relationship between “economic growth” and carbon emissions, capital formation and carbon emissions, and urbanization and carbon emissions. The environmental–financial related policies were suggested for the policymakers in Turkey to aid the reduction of carbon emission with the view of improving environmental quality.

Evaluating urban resource and environment carrying capacity by using an innovative indicator system based on eco-civilization-a case study of Guiyang

A city's sustainable development should occur via harmonious development of urban resource and environment carrying capacity (URECC) and economic growth. By following laws of harmonious development of man, nature, and society, ecological civilization refers to the sum total of material, spiritual, and institutional achievements made by mankind in promoting social, economic, and cultural development. It is an important way of realizing sustained development in China, which has been taken as an important way and method for solving the conflict between environmental problems and resources. In this study, an indicator system of URECC was built based on ecological civilization, which included 18 indicators chosen from 5 kinds of carrying capacities, which are water, land, atmospheric environment, energy, and solid waste. Then, the built index system was applied in a case study to evaluate URECC. Results showed that the indicator system could not only reveal the development tendency of URECC but also reveal changing situations of original bearing capacity, allowing the administration to take appropriate measures to improve URECC. Therefore, it can be guaranteed that economic and social development does not exceed URECC. It provides a good basis for building a more scientific, accurate, and comprehensive future assessment indicator system and also provides guidance and reference for rapid urban development. Consequently, this method not only addresses deficiencies in the existing researches but also provides a new method for assessing URECC.

The determinants of environmental quality in the SAARC region: a spatial heterogeneous panel data approach

In recent years, financial development, trade policies, and energy performance have attracted attention due to their behavior on environmental quality. Therefore, the current study examines the impact of financial development, trade openness, primary and renewable energy utilization, and economic growth on the ecological footprint in South Asian Association for Regional Cooperation (SAARC) countries from 1990 to 2017. This article progresses the proficiency of financial development by utilizing the comprehensive and multidimensional index of financial sector development based on their depth, access, and efficiency of their financial institutions and markets. In order to estimate the robust results, this study employed the cross-sectional dependency tests that allow the second-generation unit root, Westerlund cointegration, augmented mean group (AMG), error correction model (ECM), and Dumitrescu-Hurlin (D-H) panel non-causality tests. The results revealed a very weak effect of financial development in a panel of SAARC countries, while country-specific results reveal that financial development significantly enhances the pollution level in the case of Bangladesh and Sri Lanka. However, it improves the environmental quality in Nepal. Furthermore, trade openness only improves the environmental quality in the case of Nepal. Additionally, the findings explore that primary energy consumption enhances the ecological footprint in Bangladesh, Nepal, and Sri Lanka and reduces in case of Bhutan. On the contrary, renewable energy consumption significantly improves the environmental quality in all countries except Bangladesh. Finally, consistent with these findings, a number of suitable policy implications are expressed in the angle of SAARC economies.

How financial development affects CO2 emissions: A spatial econometric analysis

Based on panel data from 97 countries over the period of 2000-2014, this study uses the spatial econometric model to reexamine the effect of financial development on CO₂ emissions. The results indicated that there was a spatial correlation between CO₂ emissions among countries during this period. More importantly, we found that a country's CO₂ emissions could be influenced by the financial development of its neighbors. Specifically, the significantly negative spillover effect of financial development on CO₂ emissions dominated the significant positive direct effect, thus suggesting a significant negative total effect. These findings imply that financial development plays a fundamental role in the mitigation of CO₂ emissions, and that being surrounded by nearby countries with a high financial development could improve a country's environmental performance. These empirical insights are of particular relevance to policymakers as they act as a reminder of the importance of considering the influence of financial development both in a given country and in its neighboring countries.

Financial development and environmental quality in sub-Saharan Africa: Is there a technology effect?

In this paper, we extend the debate on environmental quality in sub-Saharan Africa (SSA) by examining the nexus between financial development and environmental quality. While doing this, we also investigate the technology effect of financial development on environmental quality and the direction of causality between financial development and environmental quality. Unlike prior studies, we use a novel composite index of financial development. We rely on a panel dataset of 35 SSA countries for the period 1985-2014. Through the augmented mean group estimator, we offer the following findings. First, financial development is a positive (negative) driver of environmental quality (CO₂ emissions). Second, financial development has an unfavourable technology effect on environmental quality. Lastly, lower environmental quality is associated with increase in population, affluence and technology. We also find, via the Dumitrescu-Hurlin panel causality test, that there is a bidirectional causal relationship between financial development and CO₂ emissions. We document the policy implications in the concluding section.

Rethinking electricity consumption and economic growth nexus in Turkey: environmental pros and cons

The critical role of electricity consumption in influencing and reshaping the economic and environmental landscape of the global economy cannot be underestimated. Electricity is the most beneficial and commonly transformed energy source; however, the strength, weakness, opportunities and threat of its consumption require scientific scrutiny. This study investigates electricity-led growth hypothesis vis-à-vis its impact on economic growth and environmental quality of Turkey. The annual time series data set from 1970 to 2014 were employed in the analysis with a battery of unit root and stationary tests. The equilibrium relationship in the study is explored using Maki and Bayer-Hanck combined cointegration tests under multiple structural breaks along with the Pesaran's ARDL bounds test procedure for robust check. The study confirms the existence of cointegration relationship between electricity consumption, economic growth, capital, labour and ecological footprint. To detect the direction of causal relations, the VECM Granger causality test is employed. The causality analysis provides empirical evidence that supports the electricity-induced growth hypothesis in Turkey. This implies that embarking on conservative energy-efficient policies will slow down Turkey's economic growth. Thus, precautionary measures that ensure adequate policy on energy mix to guarantee availability and accessibility to modern electricity will sustain economic growth and improve environmental sustainability.

The impacts of different proxies for financialization on carbon emissions in top-ten emitter countries

The nexus of financialization and carbon emissions has been widely discussed in the literature. A vast body of literature that estimates the impact of financialization on carbon emissions proxies financialization with either domestic credit or market capitalization. However, these representatives do not fully respond to the complicated nature of financial development. To fill the gaps in the existing literature, nine different proxies for financial development are used in the links with carbon emissions in the framework of EKC theory for the years 1980-2014. This study exposes reliable and robust empirical results due to the use of a number of proxies for financialization and second-generation econometric approaches in the empirical analysis. The quantile regression approach deals with unobserved heterogeneity for each cross-section and estimates different slope parameters at varying quantiles. Because non-normality and heterogeneity are detected in dataset, quantile regression provides more robust and reliable estimates than conventional econometric techniques. Results from quantile regression estimator support mixed effects of financial development on carbon emissions over quantiles; in addition, the impact of financial development on carbon emissions is varying not only for each quantile but also for different proxies of financial development. The EKC hypothesis is validated for the top-ten emitter economies. Interpretations and policy suggestions are further discussed in the present study.

Exploring the existence of environmental Kuznets curve in the midst of financial development, openness, and foreign direct investment in New Zealand: insights from ARDL bound test

The present research paper tries to explore the existence of the environmental Kuznets curve in New Zealand by taking annual time series data from 1970 to 2017. The study also considers other variables like trade openness, financial development, and foreign direct investment. Depending on the nature of the selected variables, the study has utilized the autoregressive distributed lag(ARDL) model to explore the cointegration among the variables. The result verifies the existence of the long-run cointegration among the variables. Further, it confirms the presence of the environmental Kuznets curve. The estimated result also shows that trade openness, financial development, and foreign direct investment improves the environmental quality. Moreover, to verify the environmental Kuznets curve visually, we have plotted the CO₂ emissions and economic growth, and the scatter plot exhibits an inverted U-shaped relationship between CO₂ emissions and economic growth. The turnaround point of the plot with a single break is in 1987. These findings give a wide range of policies for economic growth and environmental quality in New Zealand.

Asymmetric effects of inflation instability and GDP growth volatility on environmental quality in Pakistan

This study inspects the empirical association between inflation instability, GDP growth volatility, and the environmental quality in Pakistan, covering the period 1975-2018 by using an asymmetric autoregressive distributed lag (ARDL) methodological approach. The asymmetric ARDL results document that positive and negative shocks of inflation instability have different effects on environmental quality. Negative shocks of inflation instability have a positive influence on carbon dioxide emissions (CO2) and nitrous oxide emissions (N2O), while positive shocks of inflation instability have insignificant effects in the long run. Asymmetric findings also suggest that positive and negative fluctuations in GDP growth volatility affect CO2 and N2O emissions differently, while they have insignificant results on methane emissions (CH4) in the long run. Additionally, in the short run, positive and negative shocks of inflation instability and GDP growth volatility behave differently in terms of their impact on pollution emissions. Based on these findings, the study opens up innovative intuitions for policymakers to support a robust role of economic stability in attaining targets relevant to pollution reduction.

Signifying the imperative nexus between climate change and information and communication technology development: a case from Pakistan

The globe has faced technological affluence that enormously revolutionized the lives of humankind. Today, the manufacturing process of the energy sector, production sector, agriculture sector, and service sector is exclusively or partially based on ICT tools. The key intention of this investigation is to find out the impacts of the utilization of ICT on CO₂ emission. However, this investigation also evaluates the influence of investment in ICT and the trade of ICT tools on CO₂ emission. Further, the estimation examined the subsistence of environment Kuznets curve (EKC) theory, for the nation of Pakistan. The investigation employed an autoregressive distributed lag (ARDL) model and found that the utilization of ICT has a negative impact on CO₂ emission. Moreover, the long-run results revealed that the import of ICT equipment is more beneficial for the environment quality of Pakistan. However, ICT apparatus manufactured in Pakistan might produce electronic waste due to non-utilization of green technology. The study reported bidirectional causality between ICT and CO₂ emission. These results point towards that the emergence of ICT in industries and daily life possesses a significant and positive role in climate change in Pakistan. Also, this study corroborates the veracity of EKC in Pakistan.

The effects of FDI, technological innovation, and financial development on CO2 emissions: evidence from the BRICS countries

The scholars of environmental economics have attempted the investigation of the impact of foreign direct investment-growth nexus, but they have missed the essential role played by technological innovation and financial development regarding the environmental costs. The notable economic growth and the consequent speedy process of urbanization in BRICS countries have brought about colossal escalation of energy needs leading to environmental degradation. The present study endeavors to explore the effect of foreign direct investment, technological innovation, and financial development on carbon emissions in BRICS member countries, with data from 1990 to 2017. The results verify a strong cross-sectional dependence within the panel countries. The Augmented Mean Group (AMG) estimator shows that foreign direct investment, technological innovation, and financial development in the BRICS countries possess a negative and statistically significant long-run association with CO2 emissions, while economic growth, trade openness, urbanization, and energy use are found to contribute statistically significant and positive with carbon emissions. The current study chose to employ the Dumitrescu and Hurlin panel causality test for examining the direction of causality. Findings reveal a bidirectional long-run causality running among financial development, economic growth, trade openness, urbanization, energy use, and CO2 emissions; on the contrary, unidirectional causality is found between foreign direct investment and carbon emissions. Consequently, for the BRICS member countries, the development of industries, financial institutions, and development of technological innovation are required to attract quality foreign direct investment. Moreover, urbanization contributes enormously to environmental degradation and necessitates urgent policy responses in these countries.

Does financial development and foreign direct investment improve environmental quality? Evidence from belt and road countries

This study examines the effect of financial development (FD) and foreign direct investment (FDI) on the environmental quality for the panel of 90 belt and road countries from 1990 to 2017. This study advances the knowledge of financial development by using the new comprehensive index, which is based on access, depth, and efficiency of financial markets and financial institutions and incorporated foreign direct investment as an important determinant of environmental quality. By applying the Driscoll-Kraay standard error pooled ordinary least square method, the empirical findings reveal that FD deteriorates the environmental quality by increasing the CO₂ emissions, while FDI improves environmental quality and the relationship between economic growth (EG) and CO₂ emissions is inverted U-shaped, i.e., presence of EKC hypothesis. The energy consumption and urbanization pollute the environment, while trade openness enhances the quality of the environment. Furthermore, the Dumitrescu-Hurlin (DH) panel causality test result confirms that the bidirectional causality exists among FD, trade openness, energy consumption, and urbanization with CO₂ emissions. The empirical results provide new insights for policymakers and also have several implications for the betterment of environmental quality.

The impacts of globalization, financial development, government expenditures, and institutional quality on CO2 emissions in the presence of environmental Kuznets curve

The main objective of this study is to examine the impacts of globalization, financial development, government expenditures, and institutional quality on CO₂ emissions, incorporating energy consumption, and GDP per capita in the Environmental Kuznets Curve (EKC) model for 47 Emerging Market and Developing Economies (EMDEs) between 1990 and 2014. Owing to the presence of cross-sectional dependence and slope heterogeneity in the panel data, CADF and CIPS unit root tests are employed to validate the stationarity of the variables. Westerlund (Oxf Bull Econ Stat 69:709-748, 2007) and Banerjee and Carrion-i-Silvestre (J Time Ser Anal 38:610-636, 2017) cointegration tests denote the occurrence of cointegration among the variables. We employed CCEMG, AMG, and DCCE estimators to estimate heterogeneous parameters. The findings demonstrate that globalization, financial development, and energy consumption increase CO₂ emissions. Besides, the EKC hypothesis is affirmed in EMDEs. The accrual of governments' financial and governance activities also boosts carbon dioxide emissions. Moreover, the analysis of Dumitrescu and Hurlin causality provides evidences for the feedbacks among the variables and CO₂ emissions. From the aforementioned results, there exists the trade-off effect between economic growth and environmental quality in EMDE countries. Finally, the empirical findings of this study indicate profound implications for policy makers, which recommend governments to consider the role of finance and governance in order to ensure that energy consumption, financial development, and sustainable economic growth are in harmony with the environment in the globalization era.

Comprehensive evaluation for sustainable development based on relative resource carrying capacity-a case study of Guiyang, Southwest China

On the basis of resource carrying capacity, this study used the revised theory of relative resource carrying capacity, took Guiyang as the study object, and calculated relative carrying capacities of natural resources, economic resources, environmental resources, and social resources from 2003 to 2017. Natural resources were composed of three indicators (energy resources, water resources, and land resources). Human capital resources were incorporated into social resources. Therefore, on the basis of the revised model of relative resource carrying capacity, conclusions were drawn: when taking the whole country as the reference area, Guiyang had an overloaded population from 2003 to 2017 whether under traditional or improved resource-carrying capacity model. But there were different results from these two models. When taking the entire province as the reference area, the result was the opposite. Whether taking the whole country or the entire province as the reference area, contributions of economic resources and social resources to comprehensive resource-carrying capacity were obviously higher than that of natural resources and environmental resources. When taking Guizhou as the reference area, other districts and counties were in the state of surplus, except that Qingzhen was overloaded after 2010 and Xiuwen was overloaded in 2010, 2011, and 2012. Therefore, corresponding countermeasures on sustainable development of Guiyang had been put forward in this study. It is necessary to control the population size, increase the cultivated land resources properly, accelerate regional economic development, strengthen ecological environmental protection, and save energy resources.

Dynamic relationship among economic growth, energy, trade openness, tourism, and environmental degradation: fresh global evidence

This study analyzes the impact of economic growth, energy consumption, trade openness, and tourism on environmental degradation measured by CO₂ emissions by using annual data of 112 countries for the period 1995 to 2017. Furthermore, the study also analyzes the relationship of the variables as mentioned above in four income and five regional groups of the world. The findings confirm the existence of environmental Kuznets curve (EKC), and level of income (turning point) is also determined, which helps in the improvement of the environmental quality of selected sample countries. The results of the overall sample show that economic growth, use of energy, and tourism are proved to be harmful to the environment, whereas the result of trade openness is not statistically robust. Results of sub-samples are mixed. Findings of this study highlight some essential steps which must be taken by the government and international environmental agencies for the protection of the environment through efficient utilization of energy and sustainable tourism.

Impact of financial development on CO2 emissions: A comparative analysis of developing countries (D8) and developed countries (G8)

Financial development is one of the key drivers of rapid economic growth as well as CO₂ emission in the environment. This study aims to investigate the casual links between financial development and CO₂ emission in G8 and D8 countries for the time period from 1999 to 2013. We used PCA to develop financial development index from its five sub-components. Second-generation panel unit root tests are applied to check the stationary level and to tackle the presence of cross-sectional dependence in panels. The empirical results of PMG-panel ARDL technique show that financial development has significant and positive impact on carbon emission at a 1% statistical level in both panels in the long-run. The impact of financial development and energy consumption is more evident in D₈ and G₈ countries respectively. The energy use and trade openness affect positively while GDP significantly causes to decline the carbon emissions at 1% statistical level. The results of D-H causality test show that majority of the variables have one-way causality towards CO₂emission in both panels except the financial development and energy use having two-way causality in G8 panel only. The empirical findings of the present study suggest that through improved financial system, more funds should be invested in clean energy projects to adopt the renewable energy, strict monetary policies should be implemented to reduce the consumption of big ticket items, and adoption of measure to reduce trade embodied emission is suggested.

Impacts of export quality on environmental degradation: does income matter?

International trade in connection with carbon dioxide (CO₂) emissions has been well studied, but export quality in this context has not widely been considered yet. Hence, in this study, we fill this gap by exploring the effects of export quality, economic growth, urbanization, trade openness, and total energy use on CO₂ emissions in 63 developed and developing countries around the world. To achieve our objectives, we have used the recent techniques of panel quantile estimators as proposed in Powell (2016) and Canay. Econ J 14 (3): 368-386, (2011), along with several other estimation methods. Our overall empirical evidence shows that the existence of the Environmental Kuznets Curve (EKC) hypothesis depends heavily on the estimation method and on the development stage of the economies considered. Emissions are influenced by the same factors as in the EKC specification, as explored in sensitivity analysis. The results from the panel quantile regression model show that economic growth and total energy use are highly CO₂ emissions conducive, while urbanization increases environmental degradation at the higher quantiles, as does export quality, depending on the countries' income levels. Consequently, improvements in export product quality should be prioritized through the production of cleaner products mainly in the lower and upper middle-income countries. There should also be a decrease in total energy use in countries of all income levels. Particularly, policy makers should promote a decrease in export products intensive of fossil fuel energy by prioritizing the use of more renewable energy sources.

Do technological innovations and financial development improve environmental quality in Egypt?

Achieving the seventh Sustainable Development Goal which is clean energy at affordable prices depending on technological innovation is one of the most strategic objectives of Egypt, aiming at mitigating carbon dioxide emissions and enhancing sustainable economic growth (IRENA 2018b). Based upon this goal, the study explores the relationships among carbon dioxide emissions, technological innovation, alternative energy resources, economic growth, and financial development in Egypt over the period 1971-2014. Auto-regressive distributed lag (ARDL), fully modified ordinary least square (FMOLS), Stock and Watson dynamic ordinary least square (DOLS), and Toda-Yamamoto approaches are employed. The results show the existence of cointegration among the variables. Moreover, empirical results show that while technological innovation and alternative energy resources improve environmental quality, financial development and economic growth deteriorate it. The findings obtained from Toda-Yamamoto approach reveal the existence of bi-directional causal relation between environmental degradation and economic growth. Also, environmental degradation causes technological innovation and financial development causes environmental degradation and economic growth. Thus, several policy implications should be suggested to policymakers as enhancing the development of technological innovation especially in renewable energy sector to improve environmental quality.

The financial development-environmental degradation nexus in the United Arab Emirates: the importance of growth, globalization and structural breaks

This article revisits the nexus between financial development and environmental degradation by incorporating economic growth, electricity consumption and economic globalization in the CO₂ emissions function for the period 1975Q_I-2014Q_IV in the United Arab Emirates. We apply structural break and cointegration tests to examine unit root and cointegration between the variables. Further, the article also uses the Toda-Yamamoto causality test to investigate the causal relationship between the variables and tests the linkages of the robustness of causality by following the innovative accounting approach. Our empirical analysis shows cointegration between the series. Financial development increases CO₂ emissions. Economic growth is positively linked with environmental degradation. Electricity consumption improves environmental quality. Economic globalization affects CO₂ emissions negatively. The relationship between financial development and CO₂ emissions is U-shaped and inverted N-shaped. Further, financial development leads to environmental degradation, and environmental degradation in turn leads to financial development in the Granger sense.

Financial Development and CO2 Emissions in Post-Transition European Union Countries

Carbon dioxide emissions are on the rise, posing a serious global issue. Therefore, it is important that policymakers identify the exact causes of these emissions. This paper investigates the influence of financial development, primary energy consumption, and economic growth on CO2 emissions in 11 post-transition European economies. The assessment was made for the 1995–2017 period using panel cointegration and causality analyses. The causality analyses did not reveal significant connection between financial sector development and CO2 emissions, but rather a two-way causality between primary energy consumption and economic growth, on one hand, and CO2 emissions on the other. Meanwhile, long-run analysis disclosed that financial sector development and primary energy consumption positively affected CO2 emissions. Our results seek to grab the attention of policy makers, who could work towards creating country-specific strategies that balance the relationship between financial development and CO2 emissions. These long-term policies could ensure both development of the financial sector and environmental protection.

Is financial development good for the environment? An asymmetric analysis with CO2 emissions in China

This paper examines the asymmetric effect of financial development on CO₂ emissions in China by controlling for the effects of economic growth and energy consumption. So far, no consensus has been found as regards the nature and the intensity of the relationship between CO₂ emissions and financial development in China. While most previous studies found a positive effect of financial development on the environment, there have been also studies showing that financial development increases CO₂ emissions in China or has no effect on it. Moreover, these studies have not accounted for a possible asymmetric impact that financial development can have on CO₂ emissions in China. The empirical study in this paper is carried out with the unit root test with structural breaks and the nonlinear autoregressive distributed lag model. The obtained results show that an asymmetric effect exists. An increase in financial development helps decreasing CO₂ emission. These results show the importance to support financial development in China to decrease CO₂ emissions while sustaining economic growth.

Does regional energy consumption disparities assist to control environmental degradation in OBOR: an entropy approach

China launched the One Belt & One Road (OBOR) initiative to minimize the energy resource shortage. The China's nearby countries are rich in energy resources especially Middle East and North Africa (MENA) and Asian countries which make them ideal locations to cooperate with China in terms of energy resources, as 42.8% of world energy consumption belongs to OBOR countries. The present study elaborates the spatial distribution pattern of energy consumption disparities and its impact on environment. To do this, an entropy approach is utilized to compute the energy consumption inequalities in OBOR and its regions. The spatial and Pareto analysis show that MENA, East, and Southeast Asian economies have the highest degree of energy consumption inequalities, while European and Central Asian economies show the lowest energy consumption inequalities in OBOR region. The long-run estimates indicate that energy consumption inequalities enhance the CO₂ emission in OBOR and its region except South and Southeast Asia. Financial development also has a significantly positive impact on CO₂ emission in all models for OBOR and its regions except East Asia. Based on findings, the spatial distribution analysis is applicable to maintain balance in regional energy consumption inequality within OBOR and its regions.

The impact of electric generation capacity by renewable and non-renewable energy in Brazilian economic growth

Renewable sources are relevant in a country's energy planning because they are linked to the creation of opportunities for technological, economic, and productive development guided by the principles of sustainability. Thus, the aim of this study was to investigate the relation between electric generation capacity by renewable and non-renewable energies and Brazilian socioeconomic variables. The analysis of the interrelationships between electricity generation capacity and economic growth in Brazil, from April 2009 to March 2017, was carried out by the vector autoregressive and autoregressive distributed lag methodologies. It was verified that the variance of employment is explained by renewable sources: hydroelectric in 7.71%, biomass in 1.99%, wind energy in 3.13%, and solar energy in 10.58%. While, the GDP variance is explained in 3.15% by hydroelectric energy, 0.06% by biomass, 1.70% by wind energy, and 17.38% by solar energy. The export variance is explained by renewable sources: hydroelectric 2.48%, biomass 0.39%, wind energy 2.34%, and solar energy 17.58%. Finally, the variance of the minimum wage is explained by hydroelectric energy in 1.48%, biomass in 5.09%, wind energy in 9.09%, and solar energy in 10.67%. An ARDL (1, 1, 2, 0, 0, 0, 3, 2, 0, 2, 0, 2) model was also adjusted for natural gas, with AIC (13.082) and BIC (13.739), and the ARDL (1, 0, 1, 0, 0, 0, 0, 0, 3, 0, 0, 4) model adjusted for hydroelectric power, with AIC (13.633) and BIC (14.189), considering the variables' order cited above. Through the adjustment of the ARDL model, it was verified that there is a long-term influence of socioeconomic variables on electricity production variables, both renewable and non-renewable ones. The analysis of the impulse response function and the variance decomposition allowed us to verify that the installed capacity for production of electric energy exerts influence on Brazilian socioeconomic variables considered in this study.

Does economic policy uncertainty matter for carbon emission? Evidence from US sector level data

Economic policy uncertainty (EPU) will affect the external business environment of economic entities, which in turn affects the decision-making of economic entities. Meanwhile, carbon emissions are closely related to the production decisions of microeconomic entities. Thus, studying the relationship between EPU and carbon emissions helps to clarify the impact of institutional factors behind carbon emissions, which is significant for achieving green development. Based on US sector data, we apply a novel parametric test of Granger causality in quantiles to analyze the relationship between EPU and carbon emissions (its growth and uncertainty). We find that there is an outstanding pattern of Granger-causality from the US EPU to the growth of carbon emissions in the tails of the growth distributions of carbon emissions in the industrial sector, residential sector, electric power sector, and transportation sector, except in the commercial sector. That is, carbon emissions are affected by EPU when the growth of carbon emissions is in a higher or lower growth period. Lastly, we find that the US EPU affects carbon emissions uncertainty over the entire conditional distribution for all sectors.

The role of renewable energy, immigration and real income in environmental sustainability target. Evidence from Europe largest states

In spite of the continued deployment of technologies, innovations toward addressing the challenges of global warming, forecasting and sustaining quality environment have remained the herculean endeavour of the advanced states. Also, being migrants' destinations, resulting from the availability of economic opportunities, the target of attaining low-carbon, energy efficiency, and the cleaner atmospheric environment by these advanced economies is further bewildered. In that light, we investigate the impact of renewable energy consumption and migration on the carbon dioxide emissions of the panel of European Union's largest economies of France, Germany, and the United Kingdom over the period of 1990-2016. The consistency of the group fully modified least square and dynamic ordinary least square presents elasticity of -0.13 and -0.14 respectively for the nexus of renewables and carbon emissions. Similarly, 0.04 and 0.05 are the respective elasticity of the two models for the nexus of migration and carbon emissions. In support of extant literature, the nexus of carbon emissions with gross domestic product and consumer price index are significant, and respectively positive and negative. In addition, the study reveals evidence of Granger causality with feedback between renewable energy consumption and carbon emissions, and between consumer price index and carbon emissions. On the other hand, a unidirectional Granger causality running from migration to carbon emissions is observed. In practical term, the study presents policy frameworks for the examined countries and other advanced nations. The implementation of the presented policy pathways are potentially geared toward a forecastable, sustainable environmental quality and energy efficiency targets.

Financial development and its moderating role in environmental Kuznets curve: evidence from Pakistan

The nexus among real income, energy consumption, financial development, and carbon emission has broadly conferred area in energy and environmental literature. However, there is no study in the literature which investigates the moderating role of financial development between real income, energy consumption, and CO₂ emission in Pakistan. This study reveals the role of financial development as a moderator in the conventional environmental Kuznets curve (EKC). To achieve the objectives of this study, two approaches are employed, (i) with main effects and (ii) with interaction variables, using autoregressive distributed lag (ARDL) bounds testing approach in the case of Pakistan covering the period 1970 to 2016. Findings of the empirical analysis confirm the EKC hypothesis in the first case (without interaction effect) and our second estimations (with interaction effect) show that financial development significantly moderates the association of real output with CO₂ emission (both for the long run and short run). The negative effect of financial development on carbon emission reveals to efficacious energy management with effective environmental performance. More precisely, the results of second estimations reveal that all three interaction variables are statistically significant but the EKC curve is no more. Thus, the current study proposes that the moderating effect of the financial sectors may be the possible reason which has been ignored by prior researchers and they found mix results regarding the existence of EKC in Pakistan. In addition, the Granger causality test confirms the feedback effect between real income and carbon emission and one-way causality from all the three interaction variables and financial development to CO₂ emission. Lastly, this study posits some important policy inferences in the perspective of new economic policy formation in Pakistan.

The nexus between financial development, income level, and environment in Central and Eastern European Countries: a perspective on Belt and Road Initiative

A plethora of empirical work explored finance-income-environment nexus, aims to investigate high CO₂ emissions determinants, over the last few couples of decades. The prior empirical work assist the idea that finance and income have diverse impacts on the environment. The lack of consensus on finance-income-environment nexus in the Central and Eastern European Countries in the perspective of Belt and Road Initiative need to be examined. Therefore, the present study explores the nexus between financial development, income level, and environmental quality for a panel of eighteen Central and Eastern European Countries, over the period of 1980-2016. The Dynamic Seemingly Unrelated Regression, the Fully Modified Ordinary Least Squares, and the Dumitrescu-Hurlin panel casualty approaches are employed. The environmental Kuznets curve hypothesis also investigated for both time series panel and country-wise. The Dynamic Seemingly Unrelated Regression long-run panel results reveal that (i) financial development index and income negatively impact on environmental quality; (ii) energy consumption is the key determinant of CO₂ emissions and reduces environmental quality; (iii) urbanization and trade both enhance environmental quality via reduction of carbon emissions; and (iv) the environmental Kuznets curve hypothesis supported for the selected panel countries. The country-wise results depict that increase in environmental quality occurs due to increase in financial development (in four countries), income level (in five countries), trade (in five countries), and urbanization (in eight countries). However, the environmental quality decreases due to the increase in financial development (in six countries), income level (in eight countries), energy consumption (in twelve countries), trade (in six countries), and urbanization (in five countries). The environmental Kuznets curve hypothesis supported for five Central and Eastern European Countries. Additionally, the causality results confirmed the presence of feedback relationships among income and environmental quality, and financial development and energy consumption. Thus, we conclude that income level and financial development are the main drivers behind high carbon dioxide emissions in CEECs. The finding of the study opens up new insight for appropriate policymaking.

Does macroeconomic instability cause environmental pollution? The case of Pakistan economy

This study aims to investigate the relationship between carbon dioxide (CO₂) emissions, macroeconomic instability, real output (GDP), the square of real output (GDP²), and financial development in Pakistan using the annual dataset over the period 1971-2016. The long-run analysis is based on the ARDL bound testing approach to cointegration, whereas the short-run dynamics are observed using error correction model. The results of the bound testing approach indicate that there exists a long-run relationship between the selected variables and macroeconomic instability increases pollution emissions. In addition, the study supports the presence of environmental Kuznets curve (EKC) hypothesis for Pakistan economy where, in low-income regime, an increase in GDP causes more emissions and, in high-income regime, the relationship between GDP and CO₂ emissions becomes negative. Finally, financial development variables exert a positive impact on environmental degradation. Based on these findings, our study supports a strong role of macroeconomic stability in achieving the targets of pollution reductions.

The dynamic time-varying effects of financial development, urbanization on carbon emissions in the Yangtze River Delta, China

Based on the time series data of the Yangtze River Delta region from 1993 to 2015, this paper uses the state space model and the mediating effect model to investigate the time-varying effect and its mechanism of financial development (measured by two indicators: financial scale and financial efficiency), urbanization on carbon emissions. The results show a positive in the short term and negative in the long-run impact of financial scale on carbon emissions, while the impact of financial efficiency on carbon emissions is negative in the short term and positive in the long term, and the impact of urbanization on carbon emissions is always positive. Moreover, the results of mediating effect test demonstrate that urbanization is a positive partial mediating effect in the path of financial scale and financial efficiency influencing carbon emissions, and the mediating effect accounts for 71.64% and 61.69% of the total effect, respectively. The mediating effect of financial development includes chain effect and parallel effect; in the chain mediating effect, financial scale has a negative mediating effect with 27.40% of the total effect in the path of urbanization affecting carbon emissions, whereas financial efficiency plays a positive role with 2.07%; in the parallel mediating effect, the individual effect of financial scale and financial efficiency accounts for 24.39% and 1.05%, respectively.

Financial development and environment in South Asia: the role of institutional quality

The paper investigates the effect of financial development and institutional quality on the environment in South Asia. Other determinants of environmental quality included are economic growth, energy consumption, FDI, trade openness and institutional quality. For empirical analysis, panel data is used for the period 1984 to 2015. The estimated results indicate that Environmental Kuznet Curve (EKC) hypothesis holds in South Asia, i.e., environment first deteriorates with economic development and then it starts improving. Empirical results reveal that 1% increase in economic growth worsens environment by 1.709%. However, further increase in economic growth improves environment by 0.104%. Energy consumption has deteriorating effect on environment. Financial development has degraded the environment in the region, which indicates that South Asian countries have used financial development for capitalization and not to improve technology. The estimated results show that 1% increase in financial development deteriorates environment by 0.147%. FDI, which is a measure of financial openness, has mitigating effect on pollution. In turn, trade openness has worsened the environmental quality in the region. Institutional quality has significant negative effect on carbon emissions. It also has significant negative moderating effects on carbon emissions. The findings show that 1% improvement in institutional quality will decrease pollution by 0.114%. The study suggests that South Asian countries should focus more on technology effect and not on scale effect of financial development.

Do government expenditure and financial development impede environmental degradation in Venezuela?

Environmental degradation is causing global warming, which is of the utmost concern to both physical and social scientists. A number of potential determinants of environmental degradation are analysed in the literature. This study examines the role of government expenditure and financial development in environmental degradation in the context of the environmental Kuznets curve (EKC) hypothesis for the Venezuelan economy. Time series data have been analysed for this purpose. The long-term relationship between the variables in this study is established through a bounds test in the presence of an unknown structural break. The results of this study confirm the EKC hypothesis. It is found that energy use is harming the quality of the environment not only in the long run but also in the short run. This study finds a positive impact of government expenditure on environmental degradation, which indicates that the Venezuelan government is not taking its expenditure for a sustainable environment into account. Moreover, this study finds that financial development is hindering environmental degradation. This means that financial institutions in Venezuela can help to develop the concept of sustainable energy in the country and the Venezuelan government can reduce carbon emissions through financial development.

The dependency analysis between energy consumption, sanitation, forest area, financial development, and greenhouse gas: a continent-wise comparison of lower middle-income countries

This study explored the long-run association among greenhouse gases (GHGs), financial development, forest area, improved sanitation, renewable energy, urbanization, and trade in 24 lower middle-income countries from Asia, Europe, Africa, and America (South and North) by using panel data from 1990 to 2015. Granger causality was tested by Toda and Yamamoto approach. The bi-directional causality was established among urbanization and GHGs (Asia), financial development and forest (Asia), energy use and renewable energy (Asia), renewable energy and forest (Asia), improved sanitation and forest (Asia, Africa, America), urbanization and forest (Asia), and improved sanitation and financial development (Europe). The GHG emission also shows one-way causality is running from financial development to GHG (America), energy to GHG (Asia), renewable energy to GHG (America), forest area to GHG (America), trade openness to GHG (Africa), urbanization to GHG (Europe), GHG to financial development (Europe), GHG to energy use (Europe, Africa, and America), and GHG to trade openness (Asia). On the basis of fully modified ordinary least square and generalized method of moment, the reciprocal relationship of GHGs was observed due to financial development in Asia and Africa; renewable energy in all panels; forest area in Asia, Europe, and America; improved sanitation in Asia, Africa, and America; trade openness in Africa; and urbanization in Europe and America. Policymakers should concentrate on these variables for the reduction in GHGs. The annual convergence towards long-run equilibrium was 50.5, 31.9, and 20.9% for America, Asia, and Africa, respectively.

What is the probability of achieving the carbon dioxide emission targets of the Paris Agreement? Evidence from the top ten emitters

This study predicts the probabilities of achieving the carbon dioxide (CO₂) emission targets set by the Paris Agreement and the Intended Nationally Determined Contribution (INDC) of the top ten CO₂ emitters (TTCE). The TTCE are China, USA, India, Russia, Japan, Germany, South Korea, Iran, Saudi Arabia and Indonesia based on their emission trends over 1991-2015 period. The methods of trend extrapolation and back propagation (BP) neural networks are used in this paper to overcome the weakness of multiple linear regression (MLR) and the assumptions of the environmental Kuznets curve (EKC). The results show that the model performs well and has high predictive accuracy. The volume of the CO₂ emissions by the TTCE in 2030 is predicted to increase by 26.5-36.5%, compared with 2005. According to different trends of economic growth, energy consumption, and changes in share of renewable energy, the results show that China, India and Russia will achieve their INDC targets in some scenarios, whereas there will be a shortfall in achieving targets by USA, Japan, Germany, and South Korea. In particular, the carbon reduction situations of Saudi Arabia, Iran and Indonesia are quite severe. Moreover, the results show that there is no common trend that can be used as a suitable benchmark for every country for the implementation of carbon reductions targets of the Paris Agreement and their INDC goals. Finally, there are signs of improvement of the equality of carbon emissions based on the analysis of the Gini coefficient.

Testing the EKC hypothesis by considering trade openness, urbanization, and financial development: the case of Turkey

This study investigates the environmental Kuznets curve (EKC) hypothesis for the case of Turkey from 1960 to 2013 by considering energy consumption, trade, urbanization, and financial development variables. Although previous literature examines various aspects of the EKC hypothesis for the case of Turkey, our model augments the basic model with several covariates to develop a better understanding of the relationship among the variables and to refrain from omitted variable bias. The results of the bounds test and the error correction model under autoregressive distributed lag mechanism suggest long-run relationships among the variables as well as proof of the EKC and the scale effect in Turkey. A conditional Granger causality test reveals that there are causal relationships among the variables. Our findings can have policy implications including the imposition of a "polluter pays" mechanism, such as the implementation of a carbon tax for pollution trading, to raise the urban population's awareness about the importance of adopting renewable energy and to support clean, environmentally friendly technology.

Dynamic impact of urbanization, economic growth, energy consumption, and trade openness on CO 2 emissions in Nigeria

The objective of this paper is to examine the dynamic impact of urbanization, economic growth, energy consumption, and trade openness on CO 2 emissions in Nigeria based on autoregressive distributed lags (ARDL) approach for the period of 1971-2011. The result shows that variables were cointegrated as null hypothesis was rejected at 1 % level of significance. The coefficients of long-run result reveal that urbanization does not have any significant impact on CO 2 emissions in Nigeria, economic growth, and energy consumption has a positive and significant impact on CO 2 emissions. However, trade openness has negative and significant impact on CO 2 emissions. Consumption of energy is among the main determinant of CO 2 emissions which is directly linked to the level of income. Despite the high level of urbanization in the country, consumption of energy still remains low due to lower income of the majority populace and this might be among the reasons why urbanization does not influence emissions of CO 2 in the country. Initiating more open economy policies will be welcoming in the Nigerian economy as the openness leads to the reduction of pollutants from the environment particularly CO 2 emissions which is the major gases that deteriorate physical environment.

CO2 emissions, real output, energy consumption, trade, urbanization and financial development: testing the EKC hypothesis for the USA

This study aims to investigate the relationship between carbon dioxide (CO2) emissions, energy consumption, real output (GDP), the square of real output (GDP(2)), trade openness, urbanization, and financial development in the USA for the period 1960-2010. The bounds testing for cointegration indicates that the analyzed variables are cointegrated. In the long run, energy consumption and urbanization increase environmental degradation while financial development has no effect on it, and trade leads to environmental improvements. In addition, this study does not support the validity of the environmental Kuznets curve (EKC) hypothesis for the USA because real output leads to environmental improvements while GDP(2) increases the levels of gas emissions. The results from the Granger causality test show that there is bidirectional causality between CO2 and GDP, CO2 and energy consumption, CO2 and urbanization, GDP and urbanization, and GDP and trade openness while no causality is determined between CO2 and trade openness, and gas emissions and financial development. In addition, we have enough evidence to support one-way causality running from GDP to energy consumption, from financial development to output, and from urbanization to financial development. In light of the long-run estimates and the Granger causality analysis, the US government should take into account the importance of trade openness, urbanization, and financial development in controlling for the levels of GDP and pollution. Moreover, it should be noted that the development of efficient energy policies likely contributes to lower CO2 emissions without harming real output.

Investigating the environmental Kuznets curve hypothesis: the role of tourism and ecological footprint

The main objective of this study is to examine the environmental Kuznets curve (EKC) hypothesis by utilizing the ecological footprint as an environment indicator and GDP from tourism as the economic indicator. To achieve this goal, an environmental degradation model is established during the period of 1988-2008 for 144 countries. The results from the time series generalized method of moments (GMM) and the system panel GMM revealed that the number of countries that have a negative relationship between the ecological footprint and its determinants (GDP growth from tourism, energy consumption, trade openness, and urbanization) is more existent in the upper middle- and high-income countries. Moreover, the EKC hypothesis is more present in the upper middle- and high-income countries than the other income countries. From the outcome of this research, a number of policy recommendations were provided for the investigated countries.