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Financial Development Consequences on the Quality of the Environment: A Case of Developing Countries

Author

Listed:
  • Shahzad Jamil

    (Department of Management Sciences, COMSATS University Islamabad, WAH Campus, Pakistan.)

  • Abdul Qayyum Khan

    (Department of Management Sciences, COMSATS University Islamabad, WAH Campus, Pakistan.)

  • Muhammad Yar Khan

    (Department of Management Sciences, COMSATS University Islamabad, WAH Campus, Pakistan.)

Abstract

The study aims to analyze the Financial Development, Economic Development, Governance, and consumption of Fossil Fuels impact on Environmental Quality. Panel data of 40 developing countries for the period of 1996-2019 were examined by applying the System Generalized method of moments (GMM) technique of Blundell and Bond (1998). The results show that financial and economic development in developing countries is at the stake of environmental degradation. The governance impact is negative but low compared to other variables in the study, which shows that governance in these developing economies is not up to the mark and needs continuous improvement to maximize the impact of governance on environmental quality. Fossil fuels consumption in the sample countries showed a devastating effect on environmental quality. Financial reforms are needed to encourage and give incentives to the firms to adopt environmentally friendly technologies, which will result in development in a more sustainable way in developing economies. Easy access to low-interest loans in developing economies will help farmers and live stockholders to adopt new technologies and rethink their approaches to using fertilizers and livestock production to mitigate the emissions of CH4 and N2O. Renewable energy sources (solar panel-generated energy in industries and households, electric cars, etc.) in these developing economies will help to tackle the increase in greenhouse gases emissions because of fossil fuel consumption.

Suggested Citation

  • Shahzad Jamil & Abdul Qayyum Khan & Muhammad Yar Khan, 2023. "Financial Development Consequences on the Quality of the Environment: A Case of Developing Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 13(3), pages 325-333, May.
    • Handle: RePEc:eco:journ2:2023-03-37
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial Development. Economic Development. Governance. Fossil Fuels. Environmental Quality. Generalized method of moments;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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