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Islamic Financial Development, Economic Growth And Co2 Emissions In Indonesia

Author

Listed:
  • Azwar Iskandar

    (Financial Education and Training Agency, Ministry of Finance, Indonesia)

  • Bayu Taufiq Possumah

    (Institut Agama Islam Tazkia, Indonesia)

  • Khaerul Aqbar

    (Institute of Islamic Studies and Arabic Language, Makassar, Indonesia)

Abstract

This study examines the dynamic relationship between CO2 emissions, Islamic financial development and economic growth in Indonesia, using the Environmental Kuznets Curve (EKC) approach over the period 2000-2018. Employing ARDL and ECM testing to examine the existence of long- and short-run relationships between the variables, we found that no EKC’s support existence in Indonesia. The study also found no dynamic short-run relationship between growth, Islamic finance development and CO2 emissions. The long-run findings suggest that CO2 emissions from transport; other sectors, excluding residential buildings and commercial and public services; and the residential buildings and commercial and public services sectors are significantly associated with Islamic finance development in Indonesia. Hence, the findings of the study show that the country may need to adjust its CO2 emissions and promote eco-friendly and energy-saving activities to protect nature through Islamic finance development Strength and cost-efficiency.based financial sector development, especially in improved loans for business, would be valuable to limit CO2 emissions.

Suggested Citation

  • Azwar Iskandar & Bayu Taufiq Possumah & Khaerul Aqbar, 2020. "Islamic Financial Development, Economic Growth And Co2 Emissions In Indonesia," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 6(2), pages 353-372, May.
    • Handle: RePEc:idn:jimfjn:v:6:y:2020:i:2e:p:353-372
    DOI: https://doi.org/10.21098/jimf.v6i2.1159
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    Citations

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    Cited by:

    1. 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.
    2. Titin Agustin Nengsih & Muhamad Abduh & Urwawuska Ladini & Fadhlul mubarak, 2023. "The Impact of Islamic Financial Development, GDP, and Population on Environmental Quality in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 7-13, January.

    More about this item

    Keywords

    Islamic financial development; CO2 emissions; EKC; Growth;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other

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