Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2023 Aug;30(40):92983-93001.
doi: 10.1007/s11356-023-28971-2. Epub 2023 Jul 27.

Investigating the Causality Between Financial Development and Carbon Emissions: A Quantile-Based Analysis

Muhammad Mar'I  1 , Mehdi Seraj  2 , Turgut Tursoy  1
Affiliations

Investigating the Causality Between Financial Development and Carbon Emissions: A Quantile-Based Analysis

Muhammad Mar'I et al. Environ Sci Pollut Res Int. 2023 Aug.

Abstract

The relationship between financial development and environmental sustainability has received significant attention in academic discourse. This study explores the crucial role of financial development in addressing the challenge of increasing CO2 emissions. Using quantile-on-quantile and nonparametric causality-in-quantile methodologies, this research investigates the impacts and causal links between financial market and institution development and CO2 emissions levels in five major polluting countries from 1990 to 2019. The findings provide strong evidence regarding the impact of financial institutions and financial market development on CO2 emissions, demonstrating the presence of shocks and nonparametric causality from financial institutions and financial market development to CO2 emissions quantiles. However, the effects of financial institution shocks and nonparametric causality are diverse and asymmetric across the sample. Positive and negative shocks are observed in India, while only negative shocks are observed in China, the USA, Russia, and Japan. Moreover, the findings reveal that the influence of financial market development on CO2 emissions varies across countries, with both positive and negative shocks transmitted to CO2 emissions in the USA, Russia, and Japan, indicating higher volatility in these countries compared to China and India, where only negative shocks are observed. Therefore, our recommendation emphasizes the prioritization of environmentally conscious financial products and the enhancement of the financial system's capacity to mitigate positive shocks contributing to increased CO2 emissions. Implementing this strategy requires collective efforts to embrace sustainable financial practices that consider the environmental impact of financial activities.

Keywords: CO2; Financial markets development; financial institutions development; nonparametric causality-in-quantiles; quantile-on-quantile.

PubMed Disclaimer

References

    1. Adebayo TS (2023) <scp>Trade-off</scp> between environmental sustainability and economic growth through coal consumption and natural resources exploitation in China: New policy insights from wavelet local multiple correlation. Geol J 58(4):1384–1400. https://doi.org/10.1002/gj.4664 - DOI
    1. Adebayo TS, Ullah S, Kartal MT, Ali K, Pata UK, Ağa M (2023) Endorsing sustainable development in BRICS: The role of technological innovation, renewable energy consumption, and natural resources in limiting carbon emission. Sci Total Environ 859:160181. https://doi.org/10.1016/j.scitotenv.2022.160181 - DOI
    1. Akhayere E, Kartal MT, Adebayo TS, Kavaz D (2022) Role of energy consumption and trade openness towards environmental sustainability in Turkey. Environ Sci Pollut Res 30(8):21156–21168. https://doi.org/10.1007/s11356-022-23639-9 - DOI
    1. Alam MS, Apergis N, Paramati SR, Fang J (2021) The impacts of R&D investment and stock markets on clean-energy consumption and CO2 emissions in OECD economies. Int J Financ Econ 26(4):4979–4992 - DOI
    1. Ali U, Guo Q, Nurgazina Z, Sharif A, Kartal MT, Kılıç Depren S, Khan A (2023) Heterogeneous impact of industrialization, foreign direct investments, and technological innovation on carbon emissions intensity: Evidence from Kingdom of Saudi Arabia. Appl Energy 336:120804. https://doi.org/10.1016/j.apenergy.2023.120804 - DOI

LinkOut - more resources