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Heterogeneous analysis of energy consumption, financial development, and pollution in Africa: The relevance of regulatory quality

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  • Mesagan, Ekundayo Peter
  • Olunkwa, Chidi Ndubuisi

Abstract

The need to examine the effects of energy and financial development on pollution reduction via the channel of regulation necessitates this study. The study analyses data from 18 African nations between 1996 and 2017 using the Pooled Mean Group (PMG) approach. We employ panel data from energy use, regulatory quality, financial development, investment, trade, urbanisation, and CO2 emissions. Empirical findings show that energy use negatively but insignificantly impacts pollution over the short run while positively and significantly in the long run. For financial development, the impact is positive in the short run and negative in the long run. Most strikingly, regulatory quality exerts a negative and significant impact on pollution in both the short and long terms, while its interactive effects with energy use and financial development may significantly reduce short-run and long-run pollution. The study is original by examining the mediating role of regulatory quality in the effects of energy and financial development on pollution, with findings confirming regulatory quality as a crucial channel for enhancing the capacity of both sectors in improving Africa's environmental pollution.

Suggested Citation

  • Mesagan, Ekundayo Peter & Olunkwa, Chidi Ndubuisi, 2022. "Heterogeneous analysis of energy consumption, financial development, and pollution in Africa: The relevance of regulatory quality," Utilities Policy, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:juipol:v:74:y:2022:i:c:s0957178721001612
    DOI: 10.1016/j.jup.2021.101328
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    3. Ekundayo P. Mesagan & Titilope C. Adewuyi & Olugbenga Olaoye, 2022. "Corporate Finance, Industrial Performance and Environment in Africa: Lessons for Policy," Working Papers of the African Governance and Development Institute. 22/026, African Governance and Development Institute..
    4. Nchofoung, Tii N. & Asongu, Simplice A., 2022. "Effects of infrastructures on environmental quality contingent on trade openness and governance dynamics in Africa," Renewable Energy, Elsevier, vol. 189(C), pages 152-163.
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    7. Jingcheng Li & Menggang Li & Tianyang Wang & Xiuqin Feng, 2023. "Analysis of the Low-Carbon Transition Effect and Development Pattern of Green Credit for Prefecture-Level Cities in the Yellow River Basin," IJERPH, MDPI, vol. 20(5), pages 1-22, March.
    8. Congxin Li & Xuejia Sun, 2023. "Spatial Effects of Green Credit on Air Quality: An Empirical Test Based on the Dual Carbon Perspective," Sustainability, MDPI, vol. 15(13), pages 1-17, June.
    9. Bruno Ibekilo & Chukwunonso Ekesiobi & Precious Muhammed Emmanuel, 2023. "Heterogeneous assessment of urbanisation, energy consumption and environmental pollution in Africa: the role of regulatory quality," Economic Change and Restructuring, Springer, vol. 56(6), pages 4421-4444, December.
    10. Shabir Mohsin Hashmi & Xuyou Yu & Qasim Raza Syed & Li Rong, 2024. "Testing the environmental Kuznets curve (EKC) hypothesis amidst climate policy uncertainty: sectoral analysis using the novel Fourier ARDL approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 16503-16522, July.
    11. Li, Xueqin & Zheng, Zhuoji & Luo, Beier & Shi, Daqian & Han, Xianfeng, 2024. "The impact of electricity sales side reform on energy technology innovation: An analysis based on SCP paradigm," Energy Economics, Elsevier, vol. 136(C).
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    16. Odionye Joseph Chukwudi & Okorontah Chikeziem F. & Uruakpa Chiagoziem Gospel & Okpara Roy M. & Uba Chiwuike N., 2024. "Heterogeneous determinants of environmental sustainability: Assessing the roles of energy consumption, economic growth, and financial development," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 69(241), pages 65-93, April – J.

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    More about this item

    Keywords

    Energy consumption; Financial development; Regulatory quality; Pollution; Africa;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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