IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2019-05-44.html
   My bibliography  Save this article

Financial Development and Environmental Degradation in Indonesia: Evidence from Auto Regressive Distributed Lag Bound Testing Method

Author

Listed:
  • Nur Fitriyah

    (Department of Public Policy, Faculty of Social Sciences and Politics, Mulawarman University, Samarinda, Indonesia.)

Abstract

Financial sector can carry a negative impact on power consumption by advancing energy efficient technologies through technological advancements in the power industry to decline toxic carbon emanations. Therefore, the emphasis of the current investigation is on identifying the empirical connection between financial advancement and carbon emission in the developing country of Indonesia. In addition, given the relevant significance, the study also aims to examine the contribution of energy consumption and economic growth of Indonesia in influencing environmental degradation in the country. The results of ARDL bound testing confirm a valid long-run relationship between financial advancement, energy consumption, economic growth, and carbon dioxide emission in Indonesia. The result further suggested that financial advancement, energy consumption, and economic growth have a positive and significant impact on carbon emission in both the long and short run period. The study recommends that the government needs to divert its energy and also financial institution toward the green investment and environmental friend energy utilization, which ultimately help to reduce the carbon emission level in Indonesia.

Suggested Citation

  • Nur Fitriyah, 2019. "Financial Development and Environmental Degradation in Indonesia: Evidence from Auto Regressive Distributed Lag Bound Testing Method," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 394-400.
    • Handle: RePEc:eco:journ2:2019-05-44
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/8286/4537
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/8286/4537
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hua-Hung (Robin) Weng & Ja-Shen Chen & Pei-Ching Chen, 2015. "Effects of Green Innovation on Environmental and Corporate Performance: A Stakeholder Perspective," Sustainability, MDPI, vol. 7(5), pages 1-30, April.
    2. Théodore Koffi YAO & Olivier FOUCHÉ & Konan Emmanuel KOUADIO & Marie-Solange OGA, 2017. "Discontinuous Nature of Phreatic Aquifers in Granitic Rocks at Watershed Scale: A Stratiform Model from Perennial Streams and Well Data," Asian Review of Environmental and Earth Sciences, Asian Online Journal Publishing Group, vol. 4(1), pages 20-27.
    3. Yu Zhang & Miao Fu & Taozi Xu, 2018. "Impacts of Regional and Global Financial Crises on Employment Cycles and Industrial Structures: A Case Study of Cities in the Pearl River Delta," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(6), pages 733-744, June.
    4. Kai Zhang & Changsheng Ji & Haibing Ren, 2017. "Improving Economic Benefits through Coal Products Optimization in a Given Group," International Journal of Economics, Business and Management Studies, Pacharapa Naka, vol. 4(1), pages 57-64.
    5. Théodore Koffi YAO & Olivier FOUCHÉ & Konan Emmanuel KOUADIO & Marie-Solange OGA, 2017. "Discontinuous Nature of Phreatic Aquifers in Granitic Rocks at Watershed Scale: A Stratiform Model from Perennial Streams and Well Data," Asian Review of Environmental and Earth Sciences, Asian Online Journal Publishing Group, vol. 4(1), pages 20-27.
    6. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(5), pages 905-927, December.
    7. Shun-Pin Chuang & Sun-Jen Huang, 2018. "The Effect of Environmental Corporate Social Responsibility on Environmental Performance and Business Competitiveness: The Mediation of Green Information Technology Capital," Journal of Business Ethics, Springer, vol. 150(4), pages 991-1009, July.
    8. Sahar Afshan & Arshian Sharif & Nazneen Waseem & Reema Frooghi, 2018. "Internet banking in Pakistan: an extended technology acceptance perspective," International Journal of Business Information Systems, Inderscience Enterprises Ltd, vol. 27(3), pages 383-410.
    9. Kai Zhang & Changsheng Ji & Haibing Ren, 2017. "Improving Economic Benefits through Coal Products Optimization in a Given Group," International Journal of Economics, Business and Management Studies, Online Science Publishing, vol. 4(1), pages 57-64.
    10. Yu Zhang & Miao Fu & Taozi Xu, 2018. "Impacts of Regional and Global Financial Crises on Employment Cycles and Industrial Structures: A Case Study of Cities in the Pearl River Delta," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(6), pages 733-744.
    11. Reema Frooghi, Syeda Nazneen Waseem, Sahar Afshan, Zubair Shah, 2015. "Effect of Online Parent Brand Dimension on Online Trust, Satisfaction and Loyalty: In Context of Newspaper Industry," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 2(2), pages 223-241, October.
    12. Aldónio Ferreira & Carly Moulang & Bayu Hendro, 2010. "Environmental management accounting and innovation: an exploratory analysis," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 23(7), pages 920-948, September.
    13. Akrum Helfaya & Amr Kotb & Rasha Hanafi, 2018. "Qur’anic Ethics for Environmental Responsibility: Implications for Business Practice," Journal of Business Ethics, Springer, vol. 150(4), pages 1105-1128, July.
    14. Chen Zhu & Liping Chen, 2018. "An Analysis of the Development of China's Commercial Banks under the Structural Reform of the Supply Side," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 4(1), pages 1-8.
    15. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    16. Kwami Ossadzifo WONYRA, 2018. "Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation," Journal of Empirical Studies, Conscientia Beam, vol. 5(1), pages 45-54.
    17. Chiou, Tzu-Yun & Chan, Hing Kai & Lettice, Fiona & Chung, Sai Ho, 2011. "The influence of greening the suppliers and green innovation on environmental performance and competitive advantage in Taiwan," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 822-836.
    18. Reema Frooghi, Syeda Nazneen Waseem, Sahar Afshan, Zubair Shah, 2015. "Effect of Offline Parent Brand Dimension on Online Trust, Satisfaction and Loyalty: In Context of Newspaper Industry," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 2(2), pages 223-142, October.
    19. Kwami Ossadzifo WONYRA, 2018. "Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation," Journal of Empirical Studies, Conscientia Beam, vol. 5(1), pages 45-54.
    20. Céspedes-Lorente, José & Burgos-Jiménez, Jerónimo de & Álvarez-Gil, Maria José, 2003. "Stakeholders' environmental influence. An empirical analysis in the Spanish hotel industry," Scandinavian Journal of Management, Elsevier, vol. 19(3), pages 333-358, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Khanifah Khanifah & Udin Udin & Nor Hadi & Fitri Alfiana, 2020. "Environmental Performance and Firm Value: Testing the Role of Firm Reputation in Emerging Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 96-103.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sanjay Kumar Singh & Manlio Del Giudice & Charbel Jose Chiappetta Jabbour & Hengky Latan & Amrik Singh Sohal, 2022. "Stakeholder pressure, green innovation, and performance in small and medium‐sized enterprises: The role of green dynamic capabilities," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 500-514, January.
    2. Sasmoko Sasmoko & Leonardus W. Wasono Mihardjo & Firdaus Alamsjah & Elidjen Elidjen & Arun Kumar Tarofder, 2019. "Investigating the Effect of Digital Technologies, Energy Consumption and Climate Change on Customer s Experience: A Study from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 353-362.
    3. Azhar Susanto & Meiryani Meiryani, 2019. "The impact of Environmental Accounting Information System Alignment on Firm Performance and Environmental Performance: A case of Small and Medium Enterprises s of Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 229-236.
    4. Winwin Yadiati & Nissa Nissa & Sugiono Paulus & Harry Suharman & Meiryani Meiryani, 2019. "The Role of Green Intellectual Capital and Organizational Reputation in Influencing Environmental Performance," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 261-268.
    5. Meiryani Meiryani & Azhar Susanto & Dezie Leonarda Warganegara, 2019. "The Issues Influencing of Environmental Accounting Information Systems: An Empirical Investigation of SMEs in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 282-290.
    6. Umair Ahmed & Soleman Mozammel & Fazluz Zaman, 2020. "Impact of Ecological Innovation, Entrepreneurial Self-Efficacy and Entrepreneurial Orientation on Environmental Performance and Energy Efficiency," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 289-295.
    7. Sudawan Somjai & Ratchada Fongtanakit & Khomsan Laosillapacharoen, 2020. "Impact of Environmental Commitment, Environmental Management Accounting and Green Innovation on Firm Performance: An Empirical Investigation," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 204-210.
    8. Abu Elnasr E. Sobaih & Ahmed Hasanein & Ibrahim Elshaer, 2020. "Influences of Green Human Resources Management on Environmental Performance in Small Lodging Enterprises: The Role of Green Innovation," Sustainability, MDPI, vol. 12(24), pages 1-19, December.
    9. Kalaivani Jayaraman & Sreenivasan Jayashree & Magiswary Dorasamy, 2023. "The Effects of Green Innovations in Organizations: Influence of Stakeholders," Sustainability, MDPI, vol. 15(2), pages 1-13, January.
    10. Gholam Reza Zandi & Nadeem Khalid & Dewan Md. Zahurul Islam, 2019. "Nexus of Knowledge Transfer, Green Innovation and Environmental Performance: Impact of Environmental Management Accounting," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 387-393.
    11. Wang, Quan-Jing & Wang, Hai-Jie & Chang, Chun-Ping, 2022. "Environmental performance, green finance and green innovation: What's the long-run relationships among variables?," Energy Economics, Elsevier, vol. 110(C).
    12. Jiafeng Gu, 2021. "Spatial Dynamics between Firm Sales and Environmental Responsibility: The Mediating Role of Corporate Innovation," Sustainability, MDPI, vol. 13(4), pages 1-18, February.
    13. He, Feng & Yan, Yulin & Hao, Jing & Wu, Ji (George), 2022. "Retail investor attention and corporate green innovation: Evidence from China," Energy Economics, Elsevier, vol. 115(C).
    14. Hao Zhang & Jie He & Xiaomeng Shi & Qiong Hong & Jie Bao & Shuqi Xue, 2020. "Technology Characteristics, Stakeholder Pressure, Social Influence, and Green Innovation: Empirical Evidence from Chinese Express Companies," Sustainability, MDPI, vol. 12(7), pages 1-19, April.
    15. Xinwei Li & Wenjuan Zeng & Mao Xu, 2022. "The Moderating Role of IT Capability on Green Innovation and Ambidexterity: Towards a Corporate Sustainable Development," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    16. Arunee Kasayanond & Rofiqul Umam & Kittisak Jermsittiparsert, 2019. "Environmental Sustainability and its Growth in Malaysia by Elaborating the Green Economy and Environmental Efficiency," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 465-473.
    17. Muhammad Ishfaq Khan & Shahbaz Khalid & Umer Zaman & Ana Ercília José & Paulo Ferreira, 2021. "Green Paradox in Emerging Tourism Supply Chains: Achieving Green Consumption Behavior through Strategic Green Marketing Orientation, Brand Social Responsibility, and Green Image," IJERPH, MDPI, vol. 18(18), pages 1-24, September.
    18. Zhongju Liao, 2018. "Corporate culture, environmental innovation and financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1368-1375, December.
    19. Iman Harymawan & Mohammad Nasih & Dian Agustia & Fajar Kristanto Gautama Putra & Hadrian Geri Djajadikerta, 2022. "Investment efficiency and environmental, social, and governance reporting: Perspective from corporate integration management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1186-1202, September.
    20. Lei Ji & Chunlin Yuan & Taiwen Feng & Chen Wang, 2020. "Achieving the environmental profits of green supplier integration: The roles of supply chain resilience and knowledge combination," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(4), pages 978-989, July.

    More about this item

    Keywords

    Financial Advancement; Energy Consumption; Auto Regressive Distributed Lag; Indonesia;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2019-05-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.