The Impact of Financial Development on Carbon Emission: Evidence from China

Mingyuan Guo and Yanfang Hu
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Mingyuan Guo: College of Management and Economics, Tianjin University, Tianjin 300072, China
Yanfang Hu: College of Management and Economics, Tianjin University, Tianjin 300072, China

Sustainability, 2020, vol. 12, issue 17, 1-16

Abstract: This paper studies the impact of financial development on carbon emissions in China from 1997 to 2016. First, this paper uses the entropy method to construct a synthetical index to measure the financial development. Meanwhile, a two-dimensional panel framework is introduced to group provinces in the panel analysis. The estimation results of the time series autoregressive distributed lag model show that for China as a whole, there is a weak carbon emissions reduction effect of financial development, whether it is a long-term effect or a short-term effect. The estimation results of the panel autoregressive distributed lag model also support that an increase in financial development suppresses carbon emissions. Although financial development inhibits carbon emissions both in the short run and in the long run, the absolute value of the long-term coefficient of financial development is significantly greater than that of the short-term coefficient.

Keywords: carbon emission; financial development; time series autoregressive distributed lag model; panel autoregressive distributed lag model; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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