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Asymmetric Impact of Institutional Quality on Environmental Degradation: Evidence of the Environmental Kuznets Curve

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  • Farrah Dina Abd Razak

    (Faculty of Business and Management, Universiti Teknologi MARA, Tapah 35400, Malaysia)

  • Norlin Khalid

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi 43600, Malaysia)

  • Mohd Helmi Ali

    (Graduate School of Business, Universiti Kebangsaan Malaysia, Bangi 43600, Malaysia)

Abstract

This paper aims to discover the asymmetry impacts and co-integration between gross domestic product, financial development, energy use and environmental degradation by featuring institutional quality covering the Malaysia economy during the period from 1984 until 2017 using a nonlinear auto-regressive distributed lag model. The results confirm the existence of the Environmental Kuznets Curve hypothesis for both linear and nonlinear analyses, thus verifying the relevance of symmetric and asymmetric EKC hypotheses for Malaysia. Further, this study verifies the attributes of financial development and institutional quality that mitigates the concern on CO 2 emissions, but contradicting results were produced on energy use. The implication of this finding provides new guidelines for Malaysia authorities to consider the asymmetries in formulating environment-related policies to maintain environmental quality and achieve their sustainable development goals.

Suggested Citation

  • Farrah Dina Abd Razak & Norlin Khalid & Mohd Helmi Ali, 2021. "Asymmetric Impact of Institutional Quality on Environmental Degradation: Evidence of the Environmental Kuznets Curve," Sustainability, MDPI, vol. 13(22), pages 1-24, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:22:p:12507-:d:677931
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    Cited by:

    1. Bertrand Hamaide, 2022. "Sustainability and the Environmental Kuznets Curve Conjecture: An Introduction," Sustainability, MDPI, vol. 14(12), pages 1-4, June.
    2. Saeed Ur Rahman & Zia Ur Rahman & Maryam Ibrahim, 2022. "Validity of Environmental Kuznets Curve in the Malaysian Economy: A Fresh Evidence," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 278-288.

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