The Impact of Financial Development on Carbon Emissions: A Global Perspective

By Chunxia Jiang, Xiaoxin Ma. Sustainability, 2019

272 citations recorded by the source corpus.

Financial development has been deemed to be an important factor influencing carbon emissions; however, the specific effect generated by financial development is still disputed. In this study, we examined the relationship between financial development and carbon emissions based on a system generalized method of moments and the data of 155 countries, and we further analyzed the national differences by dividing the sample countries into two sub-groups: developed countries, and emerging market and developing countries. The empirical results indicated that from a global perspective, financial development could significantly increase carbon emissions, and the analysis of the emerging market and developing countries reached the same conclusion; however, the results indicated that for developed countries, the effect of financial development on carbon emissions is insignificant. A series of robustness checks were conducted and confirmed that our empirical results were reliable. We suggest that policymakers in emerging market and developing countries should carefully balance financial development and environmental protection, as financial development will promote carbon emissions before countries reach a relatively high development level.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/07d976754df0c48efc5cbaba7808aa39621727a7

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Citations in the corpus

Financial Development and Foreign Direct Investment—The Moderating Role of Quality Institutions (2020, background): “Most importantly, the financial system works as a resource allocator and provides information, as well as operating as a cost-reduction mechanism [7].”
The Moderating Effect of Institutional Quality on the Financial Development and Environmental Quality Nexus (2020, background): “Environmental quality (enq) is proxied by per capita CO2 emissions (metric tons per capita) [34,58].”
Does the inflow of remittances and energy consumption increase CO2 emissions in the era of globalization? A global perspective (2020, methodology): “Since we uses panel data therefore, following recently published empirical literature that used similar research design (Jiang and Ma 2019); Hassan and Nosheen (2019), we have tested the stationarity of our variables by using first-generation unit root tests i.e. Levin-Lin-Chu (Levin et al. 2002)…”