The determinants of environmental quality in the SAARC region: a spatial heterogeneous panel data approach
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RESEARCH ARTICLE
The determinants of environmental quality in the SAARC region: a spatial heterogeneous panel data approach Khaizran Khalid 1 & Muhammad Usman 1
&
Muhammad Abuzar Mehdi 1
Received: 30 May 2020 / Accepted: 16 September 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract 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. Keywords Ecological footprint: financial development . Trade openness . Renewable and non-renewable energy utilization . AMG estimation approach . SAARC countries
Introduction The human health and quality of life are reliant with ecological conditions. The environment is not limited to only surroundings or habitat, but there exists a complex dynamics of environmental and socio-cultural crescendos that impacts on Responsible editor: Nicholas Apergis * Muhammad Usman [email protected] Khaizran Khalid [email protected] Muhammad Abuzar Mehdi [email protected] 1
Department of Economics, Government College University, Faisalabad 38000, Pakistan
individuals psychological well being (Zafarullah and Huque 2018). Ecologically, the South Asian Association for Regional Cooperation (SAARC) countries is valuable due to diversified natural resources and ecosystem (Hasnat et al. 2018). Environmental quality, behavior, and utilization of environmental resources are also i
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