Does financial development reinforce ecological footprint in Singapore? Evidence from ARDL and Bayesian analysis.

Bui Hoang Ngoc,Ashar Awan

doi:10.1007/s11356-021-17565-5

Abstract

Singapore has been ranked in the most dynamic financial market and the highest ecological deficit country, indicating that the trade-off hypothesis may exist. The main goal of the present study is to probe the impact of financial development, economic growth, and human capital on ecological footprint in Singapore from 1980 to 2016. The outcomes obtained from the Autoregressive Distributed Lag (ARDL) method have failed to provide a clear impact of financial sector development on ecological footprint. However, the Bayesian analysis reveals that both financial development and economic growth have a harmful influence on EF, while the impact of human capital is beneficial. A theoretical conclusion derived is that monetary expansion policies should be associated with improving human capital to achieve the United Nations SDGs in the context of Singapore. The findings of the study are of particular interest to policymakers for developing sound policy decisions for sustainable economic progress which is not at the cost of environment.

Highlights

Climatic change is one of the biggest issues of the 21st century and a topic of overwhelming interest among the research community, policymakers, and professionals in international organizations working for sustainable development (Bayar & Maxim, 2020)
The results show that an increase in human capital leads to a corresponding rise in technological change adoption (Ackah & Kizys, 2015; Consoli et al, 2016) as well as the awareness towards environmental quality problems(Adil, 2018; Asongu, 2018; Reynolds et al, 2010; Ulucak & Li, 2020); and activities of environmental destruction should be reduced and sustainable development could be more promoted in Singapore
We aim to uncover the true nature of the link between financial development and ecological footprint (EF) by incorporating economic growth and human capital as control variables

Summary

Introduction

Climatic change is one of the biggest issues of the 21st century and a topic of overwhelming interest among the research community, policymakers, and professionals in international organizations working for sustainable development (Bayar & Maxim, 2020). CO2 emission is the major contributor of GHG and cause of climate change (Bilgili et al, 2021), anthropogenic actions fossil fuel based energy consumption, water waste management and production of fertilizers are causing damage to the ecosystem too. Earlier literature used the ecological footprints as a proxy of pressure on nature by human activities The ecological footprint is a comprehensive measure of pressure on the ecosystem due to various human activities (Ahmed et al, 2019)

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Conclusion