The Impact of Financial Development on Carbon Emissions in ASEAN Countries
DOI:
https://doi.org/10.55981/jep.2024.671Keywords:
financial development, carbon emissions, EKC hypothesis, ASEANAbstract
Financial development holds a significant role in reducing carbon emissions. However, the indirect impact of financial development can increase carbon emissions through several channels and shows an inconclusive result. Therefore, this study aims to examine whether financial development is also an important variable for reducing carbon emissions in ASEAN countries. This study utilizes a financial development index as a multidimensional indicator for financial development, using 27 years using balanced panel data from 1992 to 2018. The most important finding from this study is that the contribution of financial development in reducing carbon emissions is always less than the contribution of per capita GDP in increasing carbon emissions. This paper also finds that the inverted U-shaped curve of per capita GDP supports the EKC hypothesis in ASEAN.
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