IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v12y2019i23p4514-d291524.html
   My bibliography  Save this article

Impact of Sustainable Financial and Economic Development on Greenhouse Gas Emission in the Developed and Converging Economies

Author

Listed:
  • Magdalena Ziolo

    (Faculty of Economics and Management, University of Szczecin, 71-101 Szczecin, Poland)

  • Krzysztof Kluza

    (Collegium of Economic Analysis, SGH Warsaw School of Economics, 02-554 Warsaw, Poland)

  • Anna Spoz

    (Institute of Economics and Finance, The John Paul II Catholic University of Lublin, 20-950 Lublin, Poland)

Abstract

Several studies have examined the relationship between environmental performance and economic development. However, most of them did not take sustainable development and financial development into account. The study argues that sustainable financial and economic development contributes to reducing greenhouse gas emissions. We use the panel data regression model to capture the relationship between greenhouse gas emission and sustainable economic and financial development. The panel data refers to the period of 2007–2017. The EU 25 countries were analysed. The results show that the relationship between sustainable financial development and environmental degradation is more relevant for converging economies than developed countries. We found that the variable “energy productivity” has the strongest impact on greenhouse gas emissions for both country groups (converging and developed); however, it increases for developed countries and it decreases the greenhouse gas emissions for converging economies. We also found that environmental taxes are an efficient instrument that mitigates greenhouse gas emissions, especially in developed countries group.

Suggested Citation

  • Magdalena Ziolo & Krzysztof Kluza & Anna Spoz, 2019. "Impact of Sustainable Financial and Economic Development on Greenhouse Gas Emission in the Developed and Converging Economies," Energies, MDPI, vol. 12(23), pages 1-30, November.
    • Handle: RePEc:gam:jeners:v:12:y:2019:i:23:p:4514-:d:291524
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/12/23/4514/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/12/23/4514/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raghuram G. Rajan & Luigi Zingales, 2001. "Financial Systems, Industrial Structure, and Growth," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(4), pages 467-482.
    2. Beckerman, Wilfred, 1992. "Economic growth and the environment: Whose growth? whose environment?," World Development, Elsevier, vol. 20(4), pages 481-496, April.
    3. Lewis, Joanna I., 2010. "The evolving role of carbon finance in promoting renewable energy development in China," Energy Policy, Elsevier, vol. 38(6), pages 2875-2886, June.
    4. Tamazian, Artur & Chousa, Juan Piñeiro & Vadlamannati, Krishna Chaitanya, 2009. "Does higher economic and financial development lead to environmental degradation: Evidence from BRIC countries," Energy Policy, Elsevier, vol. 37(1), pages 246-253, January.
    5. Jalil, Abdul & Feridun, Mete, 2011. "The impact of growth, energy and financial development on the environment in China: A cointegration analysis," Energy Economics, Elsevier, vol. 33(2), pages 284-291, March.
    6. Abdullah, Sabah & Morley, Bruce, 2014. "Environmental taxes and economic growth: Evidence from panel causality tests," Energy Economics, Elsevier, vol. 42(C), pages 27-33.
    7. Kieran McQuinn & Karl Whelan, 2016. "The Prospects for Future Economic Growth in the Euro Area," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 51(6), pages 305-311, November.
    8. Giedrė Lapinskienė & Kęstutis Peleckis & Marijus Radavičius, 2015. "Economic development and greenhouse gas emissions in the European Union countries," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 16(6), pages 1109-1123, December.
    9. Shahbaz, Muhammad & Hye, Qazi Muhammad Adnan & Tiwari, Aviral Kumar & Leitão, Nuno Carlos, 2013. "Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 109-121.
    10. Shahbaz, Muhammad & Shahzad, Syed Jawad Hussain & Ahmad, Nawaz & Alam, Shaista, 2016. "Financial development and environmental quality: The way forward," Energy Policy, Elsevier, vol. 98(C), pages 353-364.
    11. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    12. 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.
    13. Tiba, Sofien & Omri, Anis, 2017. "Literature survey on the relationships between energy, environment and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1129-1146.
    14. Tamazian, Artur & Bhaskara Rao, B., 2010. "Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies," Energy Economics, Elsevier, vol. 32(1), pages 137-145, January.
    15. Omri, Anis & Daly, Saida & Rault, Christophe & Chaibi, Anissa, 2015. "Financial development, environmental quality, trade and economic growth: What causes what in MENA countries," Energy Economics, Elsevier, vol. 48(C), pages 242-252.
    16. Asli Demirgüç-Kunt & Ross Levine (ed.), 2018. "Finance and Growth," Books, Edward Elgar Publishing, number 17120.
    17. Piaggio, Matías & Padilla, Emilio, 2012. "CO2 emissions and economic activity: Heterogeneity across countries and non-stationary series," Energy Policy, Elsevier, vol. 46(C), pages 370-381.
    18. Atalla, Tarek & Bean, Patrick, 2017. "Determinants of energy productivity in 39 countries: An empirical investigation," Energy Economics, Elsevier, vol. 62(C), pages 217-229.
    19. Simone Borghesi & Alessandro Vercelli, 2009. "Greenhouse gas emissions and the energy system: Are current trends sustainable?," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 32(1/2), pages 160-174.
    20. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    21. Abdulkadir Abdulrashid Rafindadi & Ilhan Ozturk, 2017. "Dynamic Effects of Financial Development, Trade Openness and Economic Growth on Energy Consumption: Evidence from South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 74-85.
    22. Burz Razvan & Bogdan Ion Boldea, 2012. "Sustainability Of Economic Growth And Inequality In Incomes Distribution," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 249-254, July.
    23. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    24. Islam, Faridul & Shahbaz, Muhammad & Ahmed, Ashraf U. & Alam, Md. Mahmudul, 2013. "Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis," Economic Modelling, Elsevier, vol. 30(C), pages 435-441.
    25. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    26. Li Li & Di Liu & Jian Hou & Dandan Xu & Wenbo Chao, 2019. "The Study of the Impact of Carbon Finance Effect on Carbon Emissions in Beijing-Tianjin-Hebei Region—Based on Logarithmic Mean Divisia Index Decomposition Analysis," Sustainability, MDPI, vol. 11(5), pages 1-12, March.
    27. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    28. Talukdar, Debabrata & Meisner, Craig M., 2001. "Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries," World Development, Elsevier, vol. 29(5), pages 827-840, May.
    29. Malik, Meheroon Nisa Abdul & Masih, Mansur, 2017. "The relationship between energy consumption, financial development and economic growth: an evidence from Malaysia based on ARDL," MPRA Paper 86374, University Library of Munich, Germany.
    30. Zhang, Yue-Jun, 2011. "The impact of financial development on carbon emissions: An empirical analysis in China," Energy Policy, Elsevier, vol. 39(4), pages 2197-2203, April.
    31. Kumar, Ronald Ravinesh & Stauvermann, Peter Josef & Patel, Arvind & Kumar, Nikeel, 2017. "The effect of energy on output per worker in the Balkan Peninsula: A country-specific study of 12 nations in the Energy Community," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 1223-1239.
    32. repec:eid:wpaper:04/10 is not listed on IDEAS
    33. Desmarchelier, Benoît & Djellal, Faridah & Gallouj, Faïz, 2013. "Knowledge intensive business services and long term growth," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 188-205.
    34. Chang, Shu-Chen, 2015. "Effects of financial developments and income on energy consumption," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 28-44.
    35. Giedrė Lapinskienė & Kęstutis Peleckis & Neringa Slavinskaitė, 2017. "Energy consumption, economic growth and greenhouse gas emissions in the European Union countries," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(6), pages 1082-1097, November.
    36. Abbasi, Faiza & Riaz, Khalid, 2016. "CO2 emissions and financial development in an emerging economy: An augmented VAR approach," Energy Policy, Elsevier, vol. 90(C), pages 102-114.
    37. Lin, Boqiang & Li, Xuehui, 2011. "The effect of carbon tax on per capita CO2 emissions," Energy Policy, Elsevier, vol. 39(9), pages 5137-5146, September.
    38. Mohamed Amine Boutabba, 2014. "The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy," Post-Print hal-02877966, HAL.
    39. Boutabba, Mohamed Amine, 2014. "The impact of financial development, income, energy and trade on carbon emissions: Evidence from the Indian economy," Economic Modelling, Elsevier, vol. 40(C), pages 33-41.
    40. Joe-Ming Lee & Ku-Hsieh Chen & Chin-Ho Cho, 2015. "The Relationship Between Co2 Emissions And Financial Development," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(05), pages 1-21, December.
    41. Kumar, Ronald Ravinesh & Stauvermann, Peter Josef & Patel, Arvind & Kumar, Radika Devi, 2014. "Exploring the effects of energy consumption on output per worker: A study of Albania, Bulgaria, Hungary and Romania," Energy Policy, Elsevier, vol. 69(C), pages 575-585.
    42. Franklin Allen & Xian Gu & Oskar Kowalewski, 2017. "Financial structure, economic growth and development," Post-Print hal-01917114, HAL.
    43. Shahbaz, Muhammad & Kumar Tiwari, Aviral & Nasir, Muhammad, 2013. "The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa," Energy Policy, Elsevier, vol. 61(C), pages 1452-1459.
    44. Celil Aydin & Ömer Esen, 2018. "Reducing CO2 emissions in the EU member states: Do environmental taxes work?," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 61(13), pages 2396-2420, November.
    45. Apergis, Nicholas & Eleftheriou, Sofia & Payne, James E., 2013. "The relationship between international financial reporting standards, carbon emissions, and R&D expenditures: Evidence from European manufacturing firms," Ecological Economics, Elsevier, vol. 88(C), pages 57-66.
    46. Mihaela Sterpu & Georgeta Soava & Anca Mehedintu, 2018. "Impact of Economic Growth and Energy Consumption on Greenhouse Gas Emissions: Testing Environmental Curves Hypotheses on EU Countries," Sustainability, MDPI, vol. 10(9), pages 1-14, September.
    47. Dirk Schoenmaker, 2017. "Investing for the common good- a sustainable finance framework," Essays and Lectures 21249, Bruegel.
    48. Thorsten Beck & Ross Levine (ed.), 2018. "Handbook of Finance and Development," Books, Edward Elgar Publishing, number 16685.
    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. I. Jianu & S. M. Jeloaica & M. D. Tudorache, 2022. "Greenhouse Gas Emissions and its Main Drivers: a Panel Assessment for EU-27 Member States," Papers 2205.00295, arXiv.org.
    2. Iwona Bąk & Anna Spoz & Magdalena Zioło & Marek Dylewski, 2021. "Dynamic Analysis of the Similarity of Objects in Research on the Use of Renewable Energy Resources in European Union Countries," Energies, MDPI, vol. 14(13), pages 1-24, July.
    3. Krzysztof Kluza & Magdalena Zioło & Iwona Bąk & Anna Spoz, 2021. "Achieving Environmental Policy Objectives through the Implementation of Sustainable Development Goals. The Case for European Union Countries," Energies, MDPI, vol. 14(8), pages 1-22, April.
    4. Yuang He & Xiaodan Gao & Yinhui Wang, 2022. "Sustainable Financial Development: Does It Matter for Greenhouse Gas Emissions?," Sustainability, MDPI, vol. 14(9), pages 1-23, April.
    5. Chien, Fengsheng & Hsu, Ching-Chi & Ozturk, Ilhan & Sharif, Arshian & Sadiq, Muhammad, 2022. "The role of renewable energy and urbanization towards greenhouse gas emission in top Asian countries: Evidence from advance panel estimations," Renewable Energy, Elsevier, vol. 186(C), pages 207-216.
    6. Teresa Famulska & Jan Kaczmarzyk & Małgorzata Grząba-Włoszek, 2022. "Environmental Taxes in the Member States of the European Union—Trends in Energy Taxes," Energies, MDPI, vol. 15(22), pages 1-20, November.
    7. Anna Murawska & Piotr Prus, 2021. "The Progress of Sustainable Management of Ammonia Emissions from Agriculture in European Union States Including Poland—Variation, Trends, and Economic Conditions," Sustainability, MDPI, vol. 13(3), pages 1-20, January.
    8. Anna Bluszcz & Anna Manowska, 2020. "Differentiation of the Level of Sustainable Development of Energy Markets in the European Union Countries," Energies, MDPI, vol. 13(18), pages 1-20, September.
    9. Jan K. Kazak & Joanna A. Kamińska & Rafał Madej & Marta Bochenkiewicz, 2020. "Where Renewable Energy Sources Funds are Invested? Spatial Analysis of Energy Production Potential and Public Support," Energies, MDPI, vol. 13(21), pages 1-26, October.
    10. Magdalena Zioło & Krzysztof Kluza & Jarosław Kozuba & Miroslav Kelemen & Piotr Niedzielski & Paweł Zinczak, 2020. "Patterns of Interdependence between Financial Development, Fiscal Instruments, and Environmental Degradation in Developed and Converging EU Countries," IJERPH, MDPI, vol. 17(12), pages 1-17, June.
    11. Anna Murawska & Elżbieta Goryńska-Goldmann, 2023. "Greenhouse Gas Emissions in the Agricultural and Industrial Sectors—Change Trends, Economic Conditions, and Country Classification: Evidence from the European Union," Agriculture, MDPI, vol. 13(7), pages 1-25, July.

    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. Shahbaz, Muhammad & Shahzad, Syed Jawad Hussain & Ahmad, Nawaz & Alam, Shaista, 2016. "Financial development and environmental quality: The way forward," Energy Policy, Elsevier, vol. 98(C), pages 353-364.
    2. Shahbaz, Muhammad & Nasir, Muhammad Ali & Roubaud, David, 2018. "Environmental degradation in France: The effects of FDI, financial development, and energy innovations," Energy Economics, Elsevier, vol. 74(C), pages 843-857.
    3. Kim, Dong-Hyeon & Wu, Yi-Chen & Lin, Shu-Chin, 2020. "Carbon dioxide emissions and the finance curse," Energy Economics, Elsevier, vol. 88(C).
    4. Acheampong, Alex O., 2019. "Modelling for insight: Does financial development improve environmental quality?," Energy Economics, Elsevier, vol. 83(C), pages 156-179.
    5. Acheampong, Alex O. & Amponsah, Mary & Boateng, Elliot, 2020. "Does financial development mitigate carbon emissions? Evidence from heterogeneous financial economies," Energy Economics, Elsevier, vol. 88(C).
    6. Charfeddine, Lanouar & Ben Khediri, Karim, 2016. "Financial development and environmental quality in UAE: Cointegration with structural breaks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 1322-1335.
    7. Ahmed Imran Hunjra & Tahar Tayachi & Muhammad Irfan Chani & Peter Verhoeven & Asad Mehmood, 2020. "The Moderating Effect of Institutional Quality on the Financial Development and Environmental Quality Nexus," Sustainability, MDPI, vol. 12(9), pages 1-13, May.
    8. Destek, Mehmet Akif & Sohag, Kazi & Aydın, Sercan & Destek, Gamze, 2022. "Foreign direct investment, stock market capitalization and sustainable development: Relative impacts of domestic and foreign capital," MPRA Paper 117551, University Library of Munich, Germany.
    9. Shahbaz, Muhammad & Nasir, Muhammad Ali & Hille, Erik & Mahalik, Mantu Kumar, 2020. "UK's net-zero carbon emissions target: Investigating the potential role of economic growth, financial development, and R&D expenditures based on historical data (1870–2017)," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    10. Ulucak, Zübeyde Şentürk & İlkay, Salih Çağrı & Özcan, Burcu & Gedikli, Ayfer, 2020. "Financial globalization and environmental degradation nexus: Evidence from emerging economies," Resources Policy, Elsevier, vol. 67(C).
    11. Zhao, Jing & Zhao, Ziru & Zhang, Huan, 2021. "The impact of growth, energy and financial development on environmental pollution in China: New evidence from a spatial econometric analysis," Energy Economics, Elsevier, vol. 93(C).
    12. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    13. Asongu, Simplice A. & Odhiambo, Nicholas M., 2021. "Inequality, finance and renewable energy consumption in Sub-Saharan Africa," Renewable Energy, Elsevier, vol. 165(P1), pages 678-688.
    14. Mansor H. Ibrahim, 2018. "Trade–finance complementarity and carbon emission intensity: panel evidence from middle-income countries," Environment Systems and Decisions, Springer, vol. 38(4), pages 489-500, December.
    15. Mirza Md Moyen Uddin, 2020. "Does financial development stimulate environmental sustainability? Evidence from a panel study of 115 countries," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2871-2889, September.
    16. Jamal Sekali & Mohamed Bouzahzah, 2019. "Financial Development and Environmental Quality: Empirical Evidence for Morocco," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 67-74.
    17. Ngo, Thanh & Trinh, Hai Hong & Haouas, Ilham & Ullah, Subhan, 2022. "Examining the bidirectional nexus between financial development and green growth: International evidence through the roles of human capital and education expenditure," Resources Policy, Elsevier, vol. 79(C).
    18. Tomiwa Sunday Adebayo & Seyi Saint Akadiri & Ilham Haouas & Husam Rjoub, 2023. "A Time-Varying Analysis between Financial Development and Carbon Emissions: Evidence from the MINT countries," Energy & Environment, , vol. 34(5), pages 1207-1227, August.
    19. Mumin Atalay Cetin & Ibrahim Bakirtas, 2020. "The long-run environmental impacts of economic growth, financial development, and energy consumption: Evidence from emerging markets," Energy & Environment, , vol. 31(4), pages 634-655, June.
    20. Khezri, Mohsen & Karimi, Mohammad Sharif & Khan, Y.A. & Abbas, S.Z., 2021. "The spillover of financial development on CO2 emission: A spatial econometric analysis of Asia-Pacific countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).

    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:gam:jeners:v:12:y:2019:i:23:p:4514-:d:291524. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.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.