Influence of stock market factors on the natural resources dependence for environmental change: Evidence from China

Abstract

The focus on sustainable development and a green perspective is increasing for minimizing the effects of resource depletion and pollution in the economies. China has been pushing green practices to remedy the damage to the environment it has contributed in the past. There is a direct association between the stock market trading activities and surplus of current accounts on the natural resources and green environmental practices. Thus, the present study was performed to study the relationship between the stock markets and natural resource dependency in China. This study extracted the data from the Statistical yearbook of China, World Banks, and Shanghai Stock Exchange from 1981 to 2020. The novel approach of the ARDL was used to study the long-run and short-run relationships between the stock market and the natural resource dependency of China. The data of the last four decades was employed to study the variation and association between the research variables. The ARDL bounds test informed of significant cointegration among the research variables. The estimation indicated direct associations between the stock market value traded and capitalization in the long-run and short-run. The stock market capitalization and value traded of the stocks in China represent significant affluence over the dependency on natural resources. This study presents a new vision for China to develop its economic and environmental policies.