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The Impact of Islamic Finance on Carbon Emissions: Lessons from OIC Countries

Author

Listed:
  • Mohammad Iqbal Irfany

    (Faculty of Economics and Management, IPB University, Bogor, Indonesia)

  • Muhammad Ilham Nurhuda Syam

    (Faculty of Economics and Management, IPB University, Bogor, Indonesia)

  • Daffa Aqomal Haq

    (Faculty of Economics and Management, IPB University, Bogor, Indonesia)

Abstract

Environmental degradation especially the spread of emissions per capita in OIC countries has increase very rapidly with one of the factors being sharia bank financing. This study aims to know the financing of sharia banking and the other common factors in influencing emissions per capita in OIC countries. The method that will be used is panel data analysis with the Generalized Least Square (GLS) weighting model Fixed Effect Model (FEM). The results of this study indicate that Islamic bank financing, real GDP per capita, and trade openness have a positive and significant effect on emissions per capita. Then from the results of this study indicate that urbanization has a negative but it’s not significant effect on emissions per capita. The results of this study can be used as a basis for sustainability policies in the government and company regulations such as the application of the concept of green industry and the development of clean and environmentally friendly technologies and sharia banking in OIC countries can provide sustainable financing so that the financing provided is not only profit-oriented but also realizes green financing for the community and companies in general.

Suggested Citation

  • Mohammad Iqbal Irfany & Muhammad Ilham Nurhuda Syam & Daffa Aqomal Haq, 2024. "The Impact of Islamic Finance on Carbon Emissions: Lessons from OIC Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 198-205, May.
    • Handle: RePEc:eco:journ2:2024-03-22
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    References listed on IDEAS

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    More about this item

    Keywords

    CO2 Emissions; Environmental Degradation; Islamic Financing; Sustainability;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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