Asymmetric Effects of Financial Development on CO 2 Emissions in Bangladesh

Anupam Das (), Leanora Brown and Adian McFarlane
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Anupam Das: Department of Economics, Justice, and Policy Studies, Mount Royal University, Calgary, AL T3E 6K6, Canada
Leanora Brown: Finance and Economics, Gary W. Rollins College of Business, University of Tennessee at Chattanooga, Chattanooga, TN 37403, USA
Adian McFarlane: School of Management, Economics, and Mathematics, King’s University College at Western University Canada, London, ON N6A 2M3, Canada

JRFM, 2023, vol. 16, issue 5, 1-18

Abstract: Depending on how it functions and is organized, the financial system can have a negative, positive, or zero impact on the environment. For Bangladesh, the empirical relationship between financial development and the environment, measured in terms of carbon dioxide (CO 2 ) emissions per capita, is analysed over the period 1980 to 2020. This is the first such analysis for this country. We perform this within a non-linear bound testing framework while controlling for changes in energy consumption, gross domestic product, and trade volume. There are two key findings. One, we find that the relationship between CO 2 emissions per capita and financial development is cointegrating, with the direction of cointegration running from financial development to CO 2 emissions. Two, we find that positive and negative changes in financial development have asymmetric impacts on CO 2 emissions in the long and short run. The implications of these findings are discussed regarding their attendant environmental policy implications.

Keywords: financial development; CO 2 emissions; asymmetry; NARDL; Bangladesh (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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