ISLAMIC FINANCIAL DEVELOPMENT, ECONOMIC GROWTH AND CO2 EMISSIONS IN INDONESIA

Azwar Iskandar (), Bayu Taufiq Possumah () and Khaerul Aqbar ()
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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

Journal of Islamic Monetary Economics and Finance, 2020, vol. 6, issue 2, 353-372

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.

Keywords: Islamic financial development; CO2 emissions; EKC; Growth (search for similar items in EconPapers)
JEL-codes: F49 G28 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:6:y:2020:i:2e:p:353-372

DOI: 10.21098/jimf.v6i2.1159

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