The impact of financial development and globalization on environmental quality: evidence from South Asian economies
- PDF / 562,120 Bytes
- 14 Pages / 595.276 x 790.866 pts Page_size
- 22 Downloads / 182 Views
RESEARCH ARTICLE
The impact of financial development and globalization on environmental quality: evidence from South Asian economies Tasmeena Tahir 1 & Tania Luni 1
&
Muhammad Tariq Majeed 1 & Ayaz Zafar 1
Received: 5 May 2020 / Accepted: 9 October 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Climate change resulting from the higher concentration of greenhouse gases in the atmosphere is a threat to the sustainability of life on earth. To ensure sustainable development, the study analyzed the impact of financial development, globalization, and energy use on the environmental quality of South Asian economies over the period 1990–2014. To account for cross-sectional dependence, Breusch-Pagan-Lagrange multiplier, Pesaran-scaled Lagrange multiplier, bias-corrected-scaled Lagrange multiplier, and Pesaran cross-sectional dependence tests are used. The second-generation tests are used to determine the stationarity level of the variables. Furthermore, the Westerlund panel cointegration test confirms cointegration among the variables. For long-run association, fully modified ordinary least squares, dynamic ordinary least squares, and pooled mean group estimators are used. The results suggest that financial development contributes to carbon emissions, whereas globalization has the potential to control emissions. The study also used Dumitrescu and Hurlin’s (2012) panel causality test to explore the causal relationship among the variables. Unidirectional causality is observed from economic growth, globalization, and financial development to environmental degradation and from emissions to energy use, respectively. As financial development deteriorates environmental quality, therefore, the government should monitor the disbursement of loans for research and development, green financing, and efficient production that reduce resource consumption and improves environmental quality. Financial development should not compromise environmental quality and endanger sustainability. Furthermore, South Asian countries should promote globalization to support the inflow of green technologies to enhance environmental quality. Keywords Carbon dioxide . Economic growth . Environmental degradation . Financial development . Globalization . South Asia
Introduction Climate change is increasing the earth’s temperature (IPCC 2007; 2014). Global warming is increasing because of the increased amount of carbon dioxide (CO2) emissions in the Responsible Editor: Nicholas Apergis * Tania Luni [email protected] Tasmeena Tahir [email protected] Muhammad Tariq Majeed [email protected] Ayaz Zafar [email protected] 1
School of Economics, Quaid-i-Azam University , Islamabad, Pakistan
atmosphere. CO2 emissions contribute to environmental degradation. In developing economies, the share of CO2 emissions in total greenhouse gases (GHGs) emissions stand at 76.6% (IPCC 2014) which is a major reason behind deteriorating environmental quality. Therefore, controlling emissions has become a global concern. Environmental de
Data Loading...
