Diaspora income, financial development and ecological footprint in Africa

Abstract

This study examines the impact of diaspora income on the ecological footprint of 22 countries African countries. Methodologically, we used the Driscoll-Kraay (1998) fixed-effect model, fixed effect instrumental variable regression, Machado and Silva (2019) panel quantile regression, and Dumitrescu and Hurlin (2012) causality test. There are four main important findings from this empirical study: (1) diaspora income has a negative and statistical impact on ecological degradation, (2) financial development plays a crucial role in mitigating the environmental impact of diaspora income, and African countries must achieve an annual estimated threshold of financial development before they could reap the environmental quality impact of diaspora income, (3) the role of financial development in reducing the environmental degradation impact of diaspora income is less for higher polluting countries in Africa, (4) unidirectional causality from diaspora income to ecological footprint. In ensuring a sustainable environment, we recommend that African governments provide a tax credit to the recipient of the diaspora income who invests in environment-friendly technologies.

Linking clean energy consumption, globalization, and financial development to the ecological footprint in a developing country: Insights from the novel dynamic ARDL simulation techniques

“…This shows that FDV is consistent with environmental sustainability in Bangladesh. This outcome is parallel to the results obtained by Ramzan et al [ 78 ] for Pakistan, Arogundade et al [ 79 ] for Africa, and Ozturk et al [ 80 ] for South Asia, but contradicts the findings of Wang et al [ 81 ] for developing European countries. In practice, strengthening the financial system will help alleviate environmental challenges in Bangladesh.…”

Thresholds of external flows in financial development for environmental sustainability in sub-Saharan Africa

“…(2021) also posited that the attainment of remittance-CO 2 emissions reduction targets is realizable through improved financial development. The above is consistent with Arogundade et al . (2022) who found a negative nexus in the moderation effect of financial development on the impact of remittances on CO 2 emissions.…”

“…Yang et al (2020) and Yang et al (2021) also posited that the attainment of remittance-CO 2 emissions reduction targets is realizable through improved financial development. The above is consistent with Arogundade et al (2022) who found a negative nexus in the moderation effect of financial development on the impact of remittances on CO 2 emissions. From the foregoing, it can be concluded that improved financial development is not only a necessary condition but a sufficient condition to attain external inflow-CO 2 emissions reduction targets.…”

“…The nexus of the findings with the extant literature can be discussed in four mains strands pertaining to the roles of financial development, remittances, foreign aid, trade and FDI in CO 2 emissions. First, the positive unconditional effect of financial development is broadly consistent with the strand of literature on the positive incidence of financial development on CO 2 emissions (Yang et al ., 2020, 2021) while contrary to the corresponding strand on the negative incidence of financial development on CO 2 emissions (Khan and Ozturk, 2021; Arogundade et al ., 2022), yet counteracting to the strand of literature which has established no significant nexus between financial development and CO 2 emissions (Wang et al ., 2021).…”

“…In addition, studying the moderating role of financial development in the remittance-CO 2 emissions nexus, the aforementioned authors concluded that remittances decrease CO 2 emissions. Finally, Arogundade et al . (2022) found evidence that the moderation effect of financial development on the impact of remittances on CO 2 emissions is negative for 22 African countries from 1990 to 2017 via the panel quantile regression approach.Financial development, trade and CO 2 emissions nexus…”