Does Financial Development Advanced Environmental Quality in Thailand: Evidenced from ARDL

Muhammad Saeed () and Zulqarnain Haider ()
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Muhammad Saeed: PhD Scholar, School of Economics and Finance, Xi’an Jiaotong University, Xi’an, Shaanxi Province, China
Zulqarnain Haider: PhD Scholar, School of Economics and Finance, Xi’an Jiaotong University, Xi’an, Shaanxi Province, China

iRASD Journal of Energy and Environment, 2021, vol. 2, issue 2, 90-101

Abstract: This study investigates the long-term effects of financial-sector development, energy consumption, and economic growth on Thailand's carbon emission from 1970 to 2018. Firstly, use the conventional unit-root test, augmented Dickey-Fuller root (ADF), and (PP) Phillips-Perron unit root tests to confirm stationarity of variables. Later, Autoregressive Distributive lag (ARDL) test used to examine the cointegration level with long and short-run estimates. ARDL bound test verifies that there exists a long-run association among the model. Empirical results indicate that the financial sector improves the quality of the environment, while energy consumption inversely affects the environment. Furthermore, they indicate the presence of EKC hypothesis validation in Thailand by confirming the negative and positive effects of economic and square economic expansion towards carbon emission levels. Financial development is proxied by domestic credit to private divisions with a detrimental impact on a carbon production level. This study could pave the way for policymakers to capture the essential environmental pollutants better and develop efficient and effective energy in the presence of well-organized economic policies. That can significantly reduce carbon dioxide (CO2) emissions in the presence of economic development. It is the only research to examine the long-term influence of the financial sector on (CO2) carbon dioxide emission, using a cointegration-approach. Therefore, this research is a moderate demand to reduce the possibility of biased estimation of econometric variables and to close gaps in the existing literature.

Keywords: Financial Development; Energy consumption; Economic growth; EKC hypothesis; ARDL; Thailand (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ani:irdjee:v:2:y:2021:i:2:p:90-101

DOI: 10.52131/jee.2021.0202.0020

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