Abstract
This study investigates the impact of financial development (FD) on CO2 emissions in the
presence of economic growth, industrial growth, and renewable energy consumption. The
sample size consists of panel of 89 countries for the period 1992-2014. The empirical
analysis has been done by applying spatial econometrics techniques for exploring the
spillover effects from the neighboring countries. The results demonstrate that spatial
dependency exists among the sample economies. The spatial segregation analysis reveals
that both local (direct) and spillover (indirect) financial development effects significantly
lower local carbon emissions. Furthermore, the results demonstrate that in developed
countries FD lowers the CO2 emissions whereas in developing countries FD increases the
carbon emissions. The findings are useful for economic policy makers for devising
economic and environment related policies by considering the intensity of FD spatial
effects in the local economy’s pollution level. The findings of this study are also useful
for highlighting the fact that whether local economy’s environment improved (or
deteriorated) because of its own initiatives (pressure) for (on) environment or due to other
country’s initiatives (pressure) regarding FD.
Isma Samreen , Muhammad Tariq Majeed . (2020) Spatial Econometric Model of the Spillover Effects of Financial Development on Carbon Emissions: A Global Analysis , Pakistan Journal of Commerce and Social Sciences, Volume 14, Issue 2.
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