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Financial market instability and CO2 emissions

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  • Patrick Richard

    (GREDI, Département d'économique, Université de Sherbrooke)

Abstract

Capital markets may be an important tool in the reduction of pollution emissions. Indeed, they provide firms with an incentive to maintain a good environmental record (or at least, a good reputation) in order to maximize the value of their equity shares. Also, efficient capital markets may facilitate financing of environmentally friendly projects and reduce problems resulting from asymmetric information. In this paper, I use a panel of 36 countries between 1981 and 2007 to study the impact of financial market instability on CO2 emissions at the national level. According to my results, higher financial stability is beneficial for the environment.

Suggested Citation

  • Patrick Richard, 2010. "Financial market instability and CO2 emissions," Cahiers de recherche 10-20, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    • Handle: RePEc:shr:wpaper:10-20
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    File URL: http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1020.pdf
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    References listed on IDEAS

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    Cited by:

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    3. Xiaoxia Shi & Haiyun Liu & Joshua Sunday Riti, 2019. "The role of energy mix and financial development in greenhouse gas (GHG) emissions’ reduction: evidence from ten leading CO2 emitting countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 695-729, October.
    4. Ismahene Yahyaoui, 2024. "How Corruption Mitigates the Effect of FDI on Economic Growth?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 1344-1362, March.
    5. Muhammad Qayyum & Yuyuan Yu & Mir Muhammad Nizamani & Saqlain Raza & Minhaj Ali & Shijie Li, 2023. "Financial Instability and CO2 Emissions in India: Evidence from ARDL Bound Testing Approach," Energy & Environment, , vol. 34(4), pages 808-829, June.
    6. Yahyaoui, Ismahen, 2021. "How corruption mitigates the effect of FDI on economic growth?," MPRA Paper 111190, University Library of Munich, Germany.
    7. Ntarmah, Albert Henry & Kong, Yusheng & Cobbinah, Eric & Gyan, Micheal Kobina & Manu, Emmanuel Kwaku, 2020. "Analysis of the Responsiveness of Environmental Sustainability to Non-Performing Loans in Africa," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 27(2).
    8. Shahbaz, Muhammad, 2013. "Does financial instability increase environmental degradation? Fresh evidence from Pakistan," Economic Modelling, Elsevier, vol. 33(C), pages 537-544.
    9. Bo Yang & Minhaj Ali & Shujahat Haider Hashmi & Mohsin Shabir, 2020. "Income Inequality and CO 2 Emissions in Developing Countries: The Moderating Role of Financial Instability," Sustainability, MDPI, vol. 12(17), pages 1-24, August.

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    Keywords

    CO2 emissions; financial stability; dynamic panel data model;
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