Article ID Journal Published Year Pages File Type
5054597 Economic Modelling 2013 8 Pages PDF
Abstract

•Financial development reduces CO2 emissions.•Energy consumption and economic growth add in CO2 emissions.•The feedback hypothesis between financial development and CO2 emissions

This study deals with the question whether financial development reduces CO2 emissions or not in case of Malaysia. For this purpose, we apply the bounds testing approach to cointegration between the variables. We establish the presence of significant long-run relationships between CO2 emissions, financial development, energy consumption and economic growth. The empirical evidence also indicates that financial development reduces CO2 emissions. Energy consumption and economic growth add in CO2 emissions. The Granger causality analysis reveals the feedback hypothesis between financial development and CO2 emissions, energy consumption and CO2 emissions and, between CO2 emissions and economic growth.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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