Exploring the moderating effect of globalization, financial development and environmental degradation nexus: a roadmap to sustainable development

Tayyaba Rani (), Muhammad Asif Amjad (), Nabila Asghar () and Hafeez Ur Rehman ()
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Tayyaba Rani: Xi’an Jiaotong University
Muhammad Asif Amjad: University of Management and Technology
Nabila Asghar: University of Education
Hafeez Ur Rehman: University of Management and Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 12, No 33, 14499-14517

Abstract: Abstract Financial development is a multidimensional process that contributes to economic growth but sometimes it has a devastating effect on climate change. No country can achieve sustainable development goals without caring the environmental quality. The present study investigates the moderating role of globalization (KOF) in determining the financial development (FD) on environmental degradation in the SAARC countries from 1990 to 2020. The long-run coefficients are estimated using the panel quantile regression (PQR) approach at lower, middle and upper quantile groups. The study shows the U-shaped relationship across three quantile groups based on financial development and carbon emissions. The moderator globalization (KOF) brings up the change in the turning point and flattens before the maturity of the U-shaped curve at the middle quantile while flattens after the maturity of the U-shaped curve at the upper quantile. The study recommends that by using energy-efficient technologies, better financial sector interaction with globalization enhances the environmental quality in SAARC countries.

Keywords: Financial development; Sustainable developments; Environmental degradation; Globalization (search for similar items in EconPapers)
JEL-codes: B26 F6 R11 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02676-x

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