A Survey of the Interaction Effect of Financial Development and CO2 Emissions on Poverty

Farzaneh Ahmadian- Yazdi and Soheil Roudari

MPRA Paper from University Library of Munich, Germany

Abstract: The literature on financial development and poverty reduction has received growing attention over the last decade. It alleviates poverty by imposing a positive effect on GDP growth, however, less recognition has been drawn towards its indirect impact on poverty via CO2 emissions. This paper assesses the connection between financial development, CO2 emissions and poverty in Iran. In this respect, the ARDL cointegration technique has been applied to develop a model using five series of data for Iran during 1986: Q4 to 2016: Q4. The results show that an increase in the multilateral financial development index is likely to have a decreasing effect on the head-count ratio in the long-run horizon while inversing the negative effect of CO2 emissions release on poverty increase. In conclusion, a well-developed financial system is critical for decreasing losses of emissions on living standards, which is useful for policymakers, especially in natural resource-rich developing economies.

Keywords: Financial Development; CO2 emissions; Poverty (search for similar items in EconPapers)
JEL-codes: G21 I32 Q54 (search for similar items in EconPapers)
Date: 2021-02-12
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