Uneven Paths to Environmental Sustainability: Nonlinear Impacts of Financial Development in BRICS-T Countries

Hakan Yıldırım, Magdalena Radulescu, Anıl Lögün, Tuba Özkan and Mesut Dogan ()
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Hakan Yıldırım: Department of Management Information Systems, Mersin University, 33740 Mersin, Türkiye
Magdalena Radulescu: Department of Finance, Accounting and Economics, National University of Science and Technology Politehnica Bucharest, Pitesti University Center, 110040 Pitesti, Romania
Anıl Lögün: Department of Econometrics, Atatürk University, 25240 Erzurum, Türkiye
Tuba Özkan: Department of Finance and Banking, Atatürk University, 25610 Erzurum, Türkiye
Mesut Dogan: Department of Finance, Banking and Insurance, Bilecik Seyh Edebali University, 11210 Bilecik, Türkiye

Sustainability, 2025, vol. 17, issue 12, 1-20

Abstract: Greenhouse gas emissions are a major driver of global climate change, prompting increasing attention to the role of financial systems in supporting environmental sustainability. In this context, understanding how financial development influences emissions in emerging economies has become critically important. According to the findings of the long-term estimation, financial development has a direct negative impact on total greenhouse gas emissions and carbon dioxide emissions. Meanwhile, economic growth, trade openness, and population growth exert positive effects on these emissions. Although financial development negatively influences emissions, its interaction with economic growth and population dynamics is complex and may indirectly affect emissions through these factors. In addition, the error correction coefficient found for each country is negative and significant. The panel causality results indicate a unidirectional causal relationship between economic growth and total greenhouse gas emissions and carbon dioxide emissions. These findings are important for governments developing environmental policies, as they show how financial development can improve environmental impacts and help create sustainability-focused policies.

Keywords: greenhouse gas emission; carbon dioxide emission; financial development; environmental quality; sustainability; BRICS-T countries (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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