Linking financial development to environmental performance index—the case of Romania

Roxana Maria Bădîrcea, Nicoleta Mihaela Doran, Alina Georgiana Manta, Silvia Puiu, Georgeta-Madalina Meghisan-Toma and Marius Dalian Doran

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 2, 2142635

Abstract: To make steps in society towards a more sustainable future, countries must meet the targets established by the United Nations’ Sustainable Development Goals. Thus, factors that could impact the environmental indicators should be analysed. Therefore, this study aims to identify the correlations between financial development and environmental performance in Romania, during the period 1995–2018. Using composite indexes to assess financial development and the Environmental Performance Index (EPI) to express environmental performance, important results are obtained through the Canonical Cointegrating Regression (CCR) method. The explanatory variables used in the study are specific to the evaluation of the financial development of a country: access, depth and efficiency. The results show that, in the case of financial institutions, the access index and the depth index have a negative influence on the environmental performance index, while in the case of financial markets, the negative impact of the access index of financial markets can be observed. The efficiency index, both in the case of financial institutions and financial markets, generates a positive influence on environmental performance in Romania. Financial markets also address positive influences on the evolution of the environmental performance index.

Date: 2023
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DOI: 10.1080/1331677X.2022.2142635

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