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

Abstract

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.

Trade Openness and CO2 Emissions: Evidence from Tunisia

“…Mahmood et al [32] and Shahbaz et al [33] have investigated and corroborated the asymmetrical effects of financial development on CO 2 emissions in the case of Saudi Arabia and Pakistan, respectively. Siddiqui et al [34] found the asymmetrical effects of oil price on the stock markets in some Asian countries.…”

Energy Consumption and Trade Openness Nexus in Egypt: Asymmetry Analysis

“…In conclusion, both positive or negative effect may be expected on the theoretical predictions and exact relationship should confirm from rigorous empirical exercise. For this purpose, we hypothesize the following model: Assuming symmetry in the relationships may be accounted for specification biasness in the presence of statistically significant asymmetry [10][11][12]. Considering this fact, we may split each independent variable into two variables following the Shin et al [29] methodology in the following way:…”

“…Adamu et al [13] investigate and find that energy consumption, income, exports variety and Foreign Direct Investment (FDI) positively contribute to the carbon emissions in India. Mahmood et al [10] explore the determinants of CO 2 emissions of Saudi Arabia in the asymmetric settings. They report that the decreasing financial development increases the CO 2 emissions but the decreasing energy consumption helps in reducing CO 2 emissions.…”

“…Further, the symmetric effects of both increasing and decreasing trade openness on the energy consumption cannot be assumed as per past literature because trade openness may affect the energy consumption directly and may also affect indirectly through economic growth. Therefore, the total effect of increasing trade openness may have different magnitude and/or direction of effect different than that of decreasing trade openness and assuming symmetry in the presence of statistically significant asymmetry may attempt the omitted variable biasness in the model [10][11][12]. Considering this fact, this present research also considers the asymmetry in the relationship of trade openness, economic growth and energy consumption which is missing in the energy consumption literature.…”

Energy consumption, economic growth and pollution in Saudi Arabia

“…The results suggested that countries should consider the effects of their macroeconomic and international trade policies on the environmental side and explore the way it can impact the ecological footprint of the country in the neighbourhood. Mahmood et al (2018) analyzed the pollution in Saudi Arabia. Data from 1971-2014 was analyzed from the Saudi Arabia and both short and long-term relationships were analyzed.…”