Do Economic Growth, Financial Development, and Renewable Energy Consumption affect Environment Pollution? Empirical Evidence from South Asian Countries

Abstract

The main motive of this paper is to know the impact of economic growth, financial development and renewable energy consumption on environment pollution in South Asian countries (SAC) and also tries to show the impact of exports and population growth on environment pollution during the period from 1990 to 2014 by applying panel ARDL Model. In our study it is found that one unit increase in financial development (FD) tends to increase 0.3356 units of CO2 emissions (CE) in selected South Asian countries. Renewable energy consumption (RE) significantly decreases the environmental pollution, where one unit increase in the RE will decrease 0.5878 units of CO2 emission. The “error correction term (ECT)” stands the adjustment is 37% to reach a long-term balance in South Asian countries (SAC). Since there is a significant positive liaison of financial development and environment pollution, the key contribution of this study requires that policy makers should consider green financing or sustainable financial development to mitigate environment pollution.