Does financial globalisation matter for environmental quality? A sustainability perspective of Asian economies

The study aims to explore the asymmetric impact of financial globalisation on renewable CO2 emissions for selected Asian economies for a time span from 1990 to 2019. A sample of 35 economies is selected on the basis of the availability of data. To get the estimates of the variables, the analysis has applied FMOLS and DOLS estimation methods. The linear estimate of financial globalisation in the FMOLS model is negative and significant but positive and insignificant in the DOLS model. The estimates attached to positive financial globalisation are negatively significant in both FMOLS and DOLS models, implying that an increase in financial globalisation causes the environmental quality to improve. Similarly, the estimates attached to negative financial globalisation in both FMOLS and DOLS are negative and suggest that a fall in financial globalisation causes the environmental quality to deteriorate. The magnitudes of positive and negative changes are different; hence, they have a significantly different impact on environmental quality. The robust results clearly indicate that the effects of financial globalisation on CO2 emissions are asymmetric. Therefore, the policymakers should focus on positive as well as negative changes in financial globalisation while considering the impact of financial globalisation on CO2 emissions in Asian regions.