Financial development and environmental quality: The way forward

Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Ahmad, Nawaz; Alam, Shaista

doi:10.1016/j.enpol.2016.09.002

Cited by 363 publications

(185 citation statements)

References 57 publications

(57 reference statements)

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“…Mahmood and Alkhateeb [18] claimed that the results of the symmetrical investigation, in the presence of significant asymmetry in the model, may become a reason of misspecification of the model and may as a result generate biased estimates. Although the asymmetrical effects of FMD and income on Pakistani CO 2 emissions have been tested in [34] by ignoring the testing of the EKC hypothesis, this current study extends the scope of the model by analyzing asymmetrical effects of FMD and energy consumption along with testing the EKC hypothesis which is missing by [34]. Therefore, considering both asymmetrical effects and EKC may be claimed unique and a contribution in the global environment literature.…”

Section: Literature Reviewmentioning

confidence: 90%

“…In Equation (1), we assume a quadratic impact of income per capita on per capita CO 2 emissions to validate the EKC in the traditional way. Further, Shahbaz et al [34] proposed to test the asymmetrical effects of FMD and energy consumption on the CO 2 emissions. Following Shin et al [38], we introduce the nonlinear or asymmetrical effects of FM t and EC t by converting each variable into positive and negative variables in the following way:…”

Section: Model and Methodologymentioning

confidence: 99%

“…However, income and energy consumption have been found responsible for environmental degradation. On the other hand, Shahbaz et al [34] found that FMD, along with income and energy consumption, have destroyed the environment in Pakistan. Paramati et al [35] tested the influence of stock market growth and FDI on the emissions and argued that these variables have a substantial long-term effect on CO 2 emissions of G20 countries.…”

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Financial Market Development and Pollution Nexus in Saudi Arabia: Asymmetrical Analysis

Mahmood

Alrasheed

Furqan³

2018

Energies

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The study is aimed to scrutinize the presence of Environmental Kuznets Curve (EKC) hypothesis in Saudi Arabia by analyzing a period of 1971-2014. Asymmetrical impacts of Financial Market Development (FMD) and energy consumption per capita have also been tested on CO 2 emissions per capita. The estimates buoyed the long and short-run relationships in the hypothesized model, and EKC is found to be true in terms of the relationship between income and pollution. Asymmetrical effects of FMD in the long run and asymmetrical effects of energy consumption per capita in the long and short run are presented on the CO 2 emissions per capita. A decreasing FMD is found responsible for environmental degradation, and decreasing energy consumption per capita is found helpful in controlling CO 2 emissions. The tested effect of the financial crisis is found insignificant on CO 2 emissions.

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Section: Literature Reviewmentioning

confidence: 90%

Section: Model and Methodologymentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Financial Market Development and Pollution Nexus in Saudi Arabia: Asymmetrical Analysis

Mahmood

Alrasheed

Furqan³

2018

Energies

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“…In Pakistan, several studies have been done in the past to see the impact of financial development, power and economic on CO 2 emissions. Some of the major studies in this regard done by [5][6][7][8][9][10][11][12]. An investigation has been conducted by in [6] that investigated the long-run cointegration association between monetary instability and ecological degradation in Pakistan for the period 1971-2009 using time-series analysis.…”

Section: Literature Reviewmentioning

confidence: 99%

Does Energy-Growth and Environment Quality Matter for Agriculture Sector in Pakistan or not? An Application of Cointegration Approach

et al. 2019

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The main objective of this paper is to examine the long-term effects of financial development, economic growth, energy consumption (electricity consumption in the agriculture sector), foreign direct investment (FDI), and population on the environmental quality in Pakistan during the period of 1980 to 2016. We use CO2 emissions from the agriculture sector as a proxy indicator for environmental quality. We employ various unit root tests (e.g., ADF, PP, ERS, KPSS) and structural break unit root tests (Z&A, CMR) to check the stationarity and structural break in the data series. Cointegration tests, i.e., Johansen, Engle-Granger, and ARDL cointegration approaches are used to ensure their robustness. Results showed that significant long-term cointegration exists among the variables. Findings also indicated that an increase in financial development and foreign direct investment (FDI) improves environmental quality, whereas the increase in economic growth and electricity consumption in the agriculture sector degrades environmental quality in Pakistan. Based on the findings, we suggest policymakers should provide a conducive environment for foreign investment. Moreover, it is also suggested that a reliance on fossil fuels be reduced and a transition to renewable energy sources be encouraged to decrease the environmental pollution in the country.

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“…The authors use panel fully modified OLS estimators (FMOLS), rejecting the existence of the EKC for their sample countries. Last, Shahbaz et al () re‐examine the asymmetric impact of financial development on environmental quality in Pakistan for the period 1985–2014 using quarterly data. Their approach is similar to ours in the sense that they use comprehensive indices of financial development generated by using bank and stock market based financial development indicators.…”

Section: Review Of the Literaturementioning

confidence: 99%

Does Financial Development Affect Environmental Degradation? Evidence from the OECD Countries

Halkos

Polemis

2017

Bus Strat Env

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In this study, building a simple model that incorporates static and dynamic elements, the relationship of financial development and economic growth to environmental degradation is investigated together with the validation of the Environmental Kuznets Curve (EKC) hypothesis. Our analysis is based on an unbalanced panel data set covering the OECD countries over the period 1970–2014. Our approach thoroughly accounts for the presence of cross‐sectional dependence between the sample variables and utilizes second generation panel unit root tests in order to investigate possible cointegration relationships. The empirical findings do indicate that local (NOx per capita emissions) and global (CO2 per capita emissions) pollutants redefine the EKC hypothesis when we account for the presence of financial development indicators. Specifically, in the case of global pollution an N‐shape relationship is evident in both static and dynamic frameworks, with a very slow adjustment. Lastly, our study calls for a strengthening of the effectiveness of environmental degradation policies by ensuring sustainability of the OECD banking system in order to drastically reduce emissions. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

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Financial development and environmental quality: The way forward

Cited by 363 publications

References 57 publications

Financial Market Development and Pollution Nexus in Saudi Arabia: Asymmetrical Analysis

Financial Market Development and Pollution Nexus in Saudi Arabia: Asymmetrical Analysis

Does Energy-Growth and Environment Quality Matter for Agriculture Sector in Pakistan or not? An Application of Cointegration Approach

Does Financial Development Affect Environmental Degradation? Evidence from the OECD Countries

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