DOES THE EFFECT OF FINANCIAL DEVELOPMENT ON CARBON EMISSIONS VARY BETWEEN DEVELOPED AND DEVELOPING COUNTRIES?

Authors : Emrah Öget

Pages : 993-1009

Doi:10.17130/ijmeb.1490436

View : 111 | Download : 111

Publication Date : 2024-12-31

Article Type : Research Paper

Abstract :This study examines the relationship between financial development and carbon emission for 21 developed and 22 developing countries throughout 2001-2020. There is heterogeneity in slope coefficient and cross-section dependence in residuals. For this reason, the second-generation panel unit root and cointegration tests were applied to investigate the integration order of the series and the longrun relationship, respectively. Additionally, this study utilized the pooled FMOLS and DOLS estimators to determine the long-run coefficients. While cointegration results confirm the long-run relationship between financial development and carbon emissions, pooled DOLS and FMOLS results show that financial development has an increasing effect on carbon emissions for both developed and developing countries. For the DOLS estimator, where statistically more significant results were obtained, individual DOLS results were examined, and it was seen that financial development reduced carbon emissions in approximately 55% of developed countries and approximately 28% of developing countries. It is understood that the positive effect of the pooled results originates from Belgium, Denmark, South Korea, and the United States, where financial development has a highly increasing effect on carbon emissions. These results cast doubt on the validity of the EKC hypothesis for these countries.
Keywords : : Finansal Gelişme, Karbon Emisyonu, EKC hipotezi, DOLS, FMOLS

ORIGINAL ARTICLE URL