Empirics on influencing mechanisms among energy, finance, trade, environment, and economic growth: a heterogeneous dynamic panel data analysis of China.

Publisher Summary This chapter discusses the financial development and economic growth in underdeveloped countries. An observed characteristic of the process of economic development over time, in a market-oriented economy using the price mechanism to allocate resources, is an increase in the number and variety of financial institutions and a substantial rise in the proportion not only of money but also of the total of all financial assets relative to GNP and to tangible wealth. Typical statements indicate that the financial system somehow accommodates—or, to the extent that it malfunctions, it restricts—growth of real per capita output. Such an approach places emphasis on the demand side for financial services; as the economy grows it generates additional and new demands for these services, which bring about a supply response in the growth of the financial system. In this view, the lack of financial institutions in underdeveloped countries is simply an indication of the lack of demand for their services.

This study aims to investigate the effects of information and communication technology (ICT), energy consumption, economic growth, and financial development on carbon dioxide emissions using 1993–2013 panel data from 12 Asian countries. The study employs a panel unit root test accounting for the presence of cross-sectional dependence and found that Internet usage is stationary and carbon dioxide emissions, energy consumption, gross domestic production (GDP), and financial development are first-difference stationary. The results form Pedroni panel cointegration test confirms that the variables are cointegrated. The results of the cointegration test indicate that the ICT-energy-GDP-carbon dioxide emissions nexus has long-run equilibrium. Both energy consumption and GDP have significant, positive impacts on carbon dioxide emissions; energy consumption and GDP have an effect on carbon dioxide emissions growth. ICT has a significantly negative effect on carbon dioxide emissions; the promotion of ICT becomes one of the important strategies introduced to mitigate carbon dioxide emissions for various countries. Causality results show that energy consumption, GDP, and financial development cause more carbon dioxide emissions. Energy consumption, GDP, and carbon dioxide emissions cause ICT. GDP causes financial development, whereas energy consumption and GDP are interdetermined. The feedback hypothesis exists in the region; those countries need to develop alternative energy to replace fossil fuels. ICT does not threaten the environment and ICT policy can be seen as a part of carbon dioxide emissions reduction policy.

In today's highly advanced industrialised and modernised world, China's economy is still growing, and its demand for energy is increasing daily. It is crucial to examine the connection between energy consumption, carbon emissions, and economic growth in order to promote economic growth based on energy conservation and emission reduction. Using Dezhou City in Shandong Province as an example, the study builds a VAR model of carbon emission, energy consumption, and economic growth in Dezhou City based on simplified macroeconomic sub-models, energy sub-models, and environmental sub-models. It then determines the correlation and influence mechanism between the three using tests like ADF unit root and Granger causality. The pertinent elements affecting Dezhou's carbon emissions were then investigated using grey correlation analysis. Finally, based on the study's findings, policy suggestions are made regarding energy use, carbon emissions, and economic expansion. It is necessary not only to restrain high-energy consumption industries and fundamentally optimize the energy consumption structure, but also to find new economic growth points and improve economic growth channels, so as to optimize the industrial structure. In this process, increasing the proportion of the tertiary industry is a key measure. In addition, the government needs to advocate the citizens to adopt a low-carbon lifestyle, and the concept of low-carbon environmental protection will be deeply rooted in the hearts of the people. This study will provide suggestions and theoretical guidance for China's energy consumption and carbon emissions, and help achieve high-quality growth of China and even the world economy.

Energy plays important roles in human lives and economic growth. Energy use however, have its environmental impacts. Economic growth may also be
 achieved through international trade and this can also impact the environment
 by increasing energy consumption and consequently, pollution. To this end, this study examined the interrelatedness of energy consumption, environmental
 pollution, international trade and the economic growth in nine of the West
 African countries from 1990 to 2018 using the method of two stage least squares (2SLS). The study found contrary to expectation, that economic growth and international trade have no significant impact on carbon dioxide emissions in West Africa. Foreign Direct Investment (FDI) and Financial Development (FD) have no significant impact on carbon dioxide emission in West Africa. Trade openness significantly increased emission in the West African countries. Energy consumption, in conformity with economic theory has positively contributed significantly to the rise in carbon emission in West African states. Trade openness significantly increases economic growth. Other results indicate that economic growth bears no significant influence on energy consumption. This is a benefit rather than a problem as de-linking energy consumption from economic growth is a good objective of any government. Urbanization significantly increased energy consumption in West Africa. Lastly, foreign direct investment, significantly contributed positively to trade growth in West Africa. This study recommends a switch to more renewable and clean sources of energy as opposed to the fossil-based energy sources in order to de-link energy demand from emissions in their countries. Governments can also encourage the development and use of energy efficient technology or enact energy conservation policies so as to reduce fossil - fuels use among others.

Global warming has become the main concern in the current world; increased CO2 emissions are believed to be the main reason for this climate change. Therefore, this study investigates the impacts of energy consumption, economic growth, financial development, and international trade on the CO2 emissions of 17 Asia–Pacific countries. Using unbalanced panel data for 61 years (1960–2020), the Driscoll and Kraay’s standard error and panel-corrected standard error (PCSE) models are employed to observe the effect of the studied variables on the CO2 emissions. The obtained results reveal that energy consumption, financial development, economic growth, and international trade have adverse effects on the environment of the panel countries by increasing the CO2 emissions, whereas the square of economic growth reduces it, and results eventually confirm the evidence of the presence of the environmental Kuznets curve (EKC) hypothesis. Bidirectional causality is found between international trade and CO2 emissions, and unidirectional causal association from CO2 emissions to energy consumption and economic growth is also revealed. To maintain sustainable economic growth and to improve environmental quality, an increase in green energy consumption is being recommended.

PurposeThe primary objective of this research is to assess the influence of financial development, institutional quality and renewable energy consumption on India’s carbon emissions.Design/methodology/approachThis study utilises econometric methodologies, specifically the autoregressive distributed lag (ARDL) model and Toda–Yamamoto causality tests, to explore the interplay among renewable and non-renewable energy consumption, financial development, economic growth, institutional quality, trade openness and carbon emissions in India spanning the years 1996–2019.FindingsThe research indicates that in India, greater utilisation of renewable energy, enhanced financial development and improved institutional quality are linked to lower carbon emissions. On the contrary, an escalation in carbon emissions is related to the consumption of non-renewable energy and greater trade openness. The Toda–Yamamoto causality tests reveal one-way causal relationships from institutional quality, financial development, non-renewable energy consumption and economic growth to CO2 emissions. Furthermore, the study identifies reciprocal causation, demonstrating that carbon dioxide emissions influence renewable energy consumption and trade openness.Research limitations/implicationsThis study recommends that forthcoming research expand its focus by integrating more comprehensive indicators such as consumption, production, transport-based CO2 emissions or ecological footprint. Additionally, to bolster the rigour of future inquiries, researchers might consider exploring alternative regression analysis methods like NARDL and STAR.Originality/valueThis study addresses a significant gap in the existing literature by being the first empirical investigation into the effects of renewable energy consumption, institutional quality and financial development on carbon emissions in the Indian economy. Unlike prior research, we consider a comprehensive financial development and institutional quality index, providing a more holistic perspective. This unique approach contributes valuable insights into the environmental challenges faced by the Indian economy, offering a nuanced understanding of the complex dynamics of environmental degradation in this region.

This paper assesses the relationship between carbon emissions, economic growth and, energy consumption, in USA and China from the perspective of Granger causality, in a multivariate framework controlling for financial development, urbanization, and trade openness. Econometric techniques employed include unit root tests, Toda and Yamamoto Granger causality, and generalized impulse response and variance decomposition analysis for the time horizon 1980–2017. Test results indicate that governments of the USA and China cannot implement sturdier strategic energy policies in the long run without inhibiting the growth of the economy because of the bidirectional causative linkage between economic growth and energy use. A causal link does not exist between carbon emissions and financial development for both countries. Nevertheless, in the USA, there exists a unidirectional Granger causality controlling from energy consumption to financial development. In both economies, urbanization Granger causes CO2 emissions and energy use but the reverse does not hold. An upsurge in energy consumption and carbon emissions will lead to a surge in trade openness but not vice versa for China. A noteworthy result is that there is a substantiation of unidirectional causality from energy consumption to carbon emissions in both countries. In the USA, impulse response and variance decomposition analysis disclosed the effect of financial development is projected to have diminutive magnitude whiles in the future, energy use, economic growth, trade openness, and urbanization would influence carbon emissions significantly. The impacts of trade openness and financial development are expected to be of little importance in China. The general findings implied that urbanization, economic growth, and energy consumption influenced CO2 emissions significantly in the USA and China. Understanding these similar and contrasting situations is essential to reaching a global agreement on climate change affecting IMF’s top 2 biggest economies.

The dynamic links between energy consumption, economic growth, financial development and trade in China: Fresh evidence from multivariate framework analysis

The relationship between financial sector development and economic growth is a crucial issue for both developing and developed nations. To keep up with the changing world economy, there is need for developing countries like Kenya to develop their financial sectors. Kenya’s financial sector development has had a major role in its economic growth and this study provides a selected review of the literature and the relationship between Kenya’s financial sector and its economic growth. Numerous studies have been done on the effect of the financial sector on economic growth and the general conclusion is that the financial sector plays a central role in economic development and growth of the country. However, there is a limitation of empirical and theoretical work supporting the concept in developing countries. Most of the studies done focus on the direction of causality between finance development and economic growth and their relationship. For this reason, the study set out to analyze the influence of financial sector development on Kenya’s economic growth. The Neo-classical theory of growth was used to inform the study variables; banking sector, export market and economic growth. The study adopted an ex-post facto research design with Ordinary Least Square (OLS) method. The data used was secondary in nature obtained from the Kenya National Bureau of Statistics from the period 2010-2019. The findings revealed that there was a positive influence of financial sector development on economic growth. This implies that financial sector development promotes economic growth in Kenya. In policy terms, the findings, imply that Kenya can accelerate economic growth by improving the financial sector since financial development can be an engine of growth in this country. The study recommended that other major components of the financial sector development apart from the two studied; banking sector and export market, in this paper should be studied and put up in place well -structured policies that will support them and further develop the financial sector with the aspirations under the Kenya Vision 2030. Keywords : Financial sector development, Economic growth DOI: 10.7176/RJFA/12-2-01 Publication date: January 31 st 2021

Energy consumption is of great significance to the sustainable development of the economy. Due to the spatial heterogeneity of low-carbon growth in regional economies, the relationship between energy consumption and economic growth is complicated. However, a few researches have been published about spatial spillover effects and non-linearity of energy consumption and financial development on regional economic growth in China. Based on the panel data of 30 provinces in China from 2007 to 2017, this paper analyzes the spatial spillover effects and threshold effects of energy consumption and financial development on regional economic growth by using spatial and nonlinear econometric methods. The main conclusions are as follows. Spatial econometric methods show that financial development and energy consumption are two factors of production input to promote China’s economic growth. Meanwhile, energy consumption and financial development have spillover effects on regional economic growth. Additionally, the nonlinear econometric method finds that with increasing financial development, the impact of energy consumption on economic growth is segmented. Therefore, relevant policies should be implemented to enhance the role of finance in energy consumption to promote low-carbon growth of China’s economy.

Purpose – The purpose of this paper is to empirically examine the long run and causal relationship between energy consumption, carbon emissions and economic growth in India over the period 1971-2009 within multivariate framework. Design/methodology/approach – The study uses the Johansen cointegration test to examine the possible long-run equilibrium relationship followed by Granger causality test based on vector error correction model to explore short- and long-run causality between energy consumption, carbon emissions and economic growth in India. Findings – Cointegration result indicates the long-run equilibrium relationship between economic growth, energy consumption and carbon emissions. Further causality results suggest unidirectional causality running from energy consumption and carbon emissions to economic growth in long run, energy consumption to carbon emissions, carbon emissions to economic growth and economic growth to energy consumption in short run. Practical implications – There is urgent ne...

Using the Environmental Kuznets Curve (EKC) hypothesis as a theoretical framework and applying Estimated Generalised Least Square (EGLS) approach, this chapter examines the impact of energy consumption, economic growth, industrialisation and corruption on carbon dioxide emissions as well as finds out the causal relationship among them using panel data of 10 Asian economies over the period 1980–2019. Our empirical findings from EGLS model suggest that there exists an ongoing rising relationship between CO2 emissions and economic growth both in the short-run and long-run which is opposing to what is claimed by the EKC hypothesis. Moreover, per capita CO2 emissions rise positively with respect to increase in energy consumption, urbanisation, gradual industrialisation and growth in urban population in the long-run. Moreover, countries with adoption of more corruptive practices are found to have causing more environmental degradation through excessive emission of carbon dioxide in the long-run. The study also indicates the existence of unidirectional causalities running from carbon dioxide emission to energy consumption, from industrialisation and urban population growth to per capita CO2 emissions, from industrialisation to GDP growth per capita and bidirectional causality between financial development and economic growth via GDP growth per capita. Therefore, these unidirectional causalities entail that CO2 emission reduction or abatement measures can be applied without having any unpleasant effect on the real industrialisation, energy consumption and urbanisation in selected Asian countries.

Expanding the capability of technological innovations is curial in acquiring renewable energy sources, enhancing the efficiency of energy and lowering carbon dioxide emissions which can leads to environmental sustainability however the factors effecting the level of technological innovations needs to be explored. Consequently, this study explores the effect of carbon dioxide emission, energy consumption and foreign direct investment on technological innovations in 179 global countries from 1980 to 2019. The results indicate that foreign direct investment significantly and negatively affect technological innovations proxy by patent nonresidents in the lower quantiles while this effect is negative insignificant at the highest. Carbon dioxide emission and financial development significantly and positively effect technological innovations proxy by patent nonresidents while energy consumption and trade significantly decrease technological innovations. In case of dependent variable research and development, the effect of foreign direct investment on technological innovations and international trade is negative while financial development and energy consumption positively and significantly affect technological innovations proxy by research and development. The effect of financial development is negative significant and negative insignificant across quantile while the highest quantile gives positive coefficient thus shows that its increase technological innovations proxy by research and development. The findings have considerable policy implications for the sample countries regarding economic growth, foreign direct investment inflow, energy consumption and technological innovations.

The main objective of the current study is to investigate the impact of economic growth, financial development (both the development and shock), and energy consumption on the CO2 emission in the selected Gulf Countries. This research study incorporates financial development as the measurement of environmental quality. In this way, it will add to the existing literature. The use of NARDL has been made in this research, which is an advanced econometric approach. An efficient way of dealing with the component of asymmetry in financial development on emissions of CO2 has been provided by NARDL with reference to the economy of Gulf countries for time 1980–2014. According to the findings of the study, the financial development, energy consumptions and GDP growth are in positive and significant relationship with CO2 emission. Thus, the findings of the study are providing support to the argument broached in the study that financial development, energy consumption and economic growth are linked with CO2 emission. The study which is among the pioneering study will be helpful for policymakers, environmental economist and researchers in explaining the impact of financial development and economic growth on environmental related issues such as CO2 emission

The main objective of the current study is to investigate the impact of economic growth, financial development (both the development and shock), and energy consumption on the CO2 emission in the selected Gulf Countries. This research study incorporates financial development as the measurement of environmental quality. In this way, it will add to the existing literature. The use of NARDL has been made in this research, which is an advanced econometric approach. An efficient way of dealing with the component of asymmetry in financial development on emissions of CO2 has been provided by NARDL with reference to the economy of Gulf countries for time 1980–2014. According to the findings of the study, the financial development, energy consumptions and GDP growth are in positive and significant relationship with CO2 emission. Thus, the findings of the study are providing support to the argument broached in the study that financial development, energy consumption and economic growth are linked with CO2 emission. The study which is among the pioneering study will be helpful for policymakers, environmental economist and researchers in explaining the impact of financial development and economic growth on environmental related issues such as CO2 emission