The Moderating Effect of Institutional Quality on the Financial Development and Environmental Quality Nexus

Ahmed Hunjra (), Tahar Tayachi, Muhammad Chani, Peter Verhoeven and Asad Mehmood
Additional contact information
Tahar Tayachi: Finance Department, Effat College of Business, Effat University, Jeddah 21478, Saudi Arabia
Peter Verhoeven: School of Economics and Finance, Queensland University of Technology, Brisbane 4000, Australia
Asad Mehmood: Department of Management and Business Administration, University “G. d’Annunzio” of Chieti-Pescara, 65127 Pescara, Italy

Sustainability, 2020, vol. 12, issue 9, 1-13

Abstract: Environmental sustainability is a major concern of contemporary societies, businesses, and governments. However, there is a lack of knowledge as to how countries can achieve the goal to end poverty, whilst protecting the planet. It is the objective of our study to examine the moderating role of institutional quality on the financial development and environmental quality nexus in South Asia. Our sample consists of panel data of five South Asian countries (India, Bangladesh, Nepal, Sri Lanka and Pakistan) from 1984 to 2018. We find that financial development increases CO 2 emissions in this region, implying that countries in South Asia have utilized financial development for capitalization, instead of improving production technology. Institutional quality moderates the negative impact of financial development on environmental sustainability. An implication of our findings is that efforts to improve institutional quality may help to promote sustainable development in South Asia.

Keywords: economic growth; energy consumption; environmental pollution; financial development; foreign direct investment; institutional quality (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 (29)

Downloads: (external link)
https://www.mdpi.com/2071-1050/12/9/3805/pdf (application/pdf)
https://www.mdpi.com/2071-1050/12/9/3805/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:9:p:3805-:d:354942

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().