The Nexus Between Economic Growth and Environmental Degradation: Insights from High-Impact Asian Economies

Muddassar Bilal, Shamim Akhtar, Umbrin Akbar and Mudsir Ismail
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Muddassar Bilal: Ph.D. Scholar, Department of Business Administration, University of Sialkot, Sialkot, Pakistan
Shamim Akhtar: Assistant Professor, Department of Business Administration, University of Sialkot, Sialkot, Pakistan
Umbrin Akbar: Ph.D. Scholar, Department of Business Administration, University of Sialkot, Sialkot, Pakistan
Mudsir Ismail: Ph.D. Scholar, Department of Business Administration, University of Sialkot, Sialkot, Pakistan

Bulletin of Business and Economics (BBE), 2025, vol. 13, issue 3, 687-695

Abstract: This study investigates the relationship between green finance and carbon emissions in China and India, two of the world's largest carbon emitters. Using data from 2000-2020, the research applies the ADF unit root test, ARDL Bound test, and other diagnostic tests to explore how green finance impacts CO2 emissions, controlling for GDP, inflation, and the shadow economy. The findings reveal that in China, CO2 emissions are driven by past emissions and inflation, while economic growth reduces emissions. In India, inflation and land use changes contribute to emissions, while socio-economic factors mitigate them. The error correction term indicates that both countries are converging toward long-run equilibrium. The results emphasize the importance of green finance in reducing emissions, suggesting policymakers should prioritize sustainable investments and strategies that balance economic growth with environmental protection. These findings are particularly relevant for global efforts to combat climate change, offering insights for emerging economies aiming to achieve sustainability goals.

Keywords: Green finance; CO2 emissions; Shadow economy; Environmental Degradation; ARDLbound test (search for similar items in EconPapers)
Date: 2025
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