Financial development and carbon dioxide emissions in Nigeria: evidence from the ARDL bounds approach (original) (raw)
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This study examines the impact of financial development on carbon dioxide emissions in Nigeria over the period 1971–2014. Income per capita, energy consumption, exchange rate and urbanization are incorporated in the analysis. The empirical analysis based on linear and nonlinear autoregressive distributed lag techniques provides evidence of long-run relationship among the variables in Nigeria. The results in general show that financial development has significant asymmetric effects on carbon dioxide emissions in Nigeria. Both short-run and long-run analyses show that the impact of positive changes in financial development on carbon dioxide emissions is significantly different from that of negative changes. The results suggest that in Nigeria positive shocks in financial development have significant reducing effect on carbon dioxide emissions, while negative shocks in financial development have significant increasing effect on carbon dioxide emissions. The empirical results also show ...
Financial Market Development and CO2 Emissions Nexus in Nigeria: An Application of Ardl Approach
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The paper investigated the impact of financial development on CO2 emissions in Nigeria from 1981 to 2019. In the process of investigating the impact, Augmented Dickey-Fuller and Philip Perron, as well as the Zivot-Andrew structural breaks, unit root tests were applied. Their results indicated that financial development, level of income, and CO2 emissions were stationary at the first difference and that of Zivot-Andrew structural breaks indicated a mixture of integration. Cointegration relationship among the variables was established through autoregressive distributed lag model bounds test. The autoregressive distributed lag model long-and-short run models results indicated that financial development and income level significantly negatively impact the CO2 emissions. The suggestion based on these results is that financial development and income level help in financing clean projects in the long-and-short runs. The Granger causality result revealed bidirectional causality from financi...
Carbon Dioxide Emissions and Economic Growth Nexus in Nigeria: The Role of Financial Development
American Journal of Social Sciences and Humanities
This study examines the effect of carbon dioxide emissions on economic growth, including investigating whether the CO2-economic growth relationship is dependent on financial development in Nigeria between 1980 and 2020. Due to dwindling economic growth, Nigeria experienced two recessions in one decade. Besides poor growth rates, Nigeria remains a leading emitter of CO2 in the Sub-Saharan region. The motivation for this study derived from the rising level of carbon dioxide emissions in Nigeria which might affect economic growth by dwindling agricultural activities (low output) in some regions, pose health challenges and create a shortage of inputs to agro-allied industries. Hence, this paper attempted to see if there was a causal relationship between carbon dioxide emissions, financial development, and economic growth in Nigeria. The relationship between the variables was examined using the Autoregressive Distributed Lag estimation technique (ARDL) estimation method. The framework fo...
DOES TRADE OPENNESS EXACERBATE CARBON DIOXIDE EMISSION? : EVIDENCE FROM NIGERIA
Oyeranti Olugboyega Alabi, 2023
High emissions of greenhouse gases components have today become a world phenomenon. In Africa, Nigeria is the second-highest emitter of greenhouse gases (GHGs), after South Africa. Carbon dioxide (CO2) emissions constitute the largest source of GHGs; hence it has become a widely discussed and researched subject. This, however, is a negative unintended consequence that has emanated from the growing interdependence of the world economies. One of the major instruments of achieving a global world which also stood as a major determinant of economic growth is trade openness. This paper, therefore, examines the impact and the relationship between trade openness on CO2 emissions in Nigeria. The method employed to achieve the stated objectives is the Autoregressive Distributed Lag (ARDL) cointegration technique, using the annual time series data sourced from the World Bank Development Indicator, 2020, for periods 1980 to 2019. The major findings from the study show that there is an insignificant positive relationship between trade openness on CO2 emissions. Also, there exists an increasing trend of CO2 emissions in Nigeria, while that of trade openness shows fluctuation for the periodic review and this depicts a high vulnerability to external shocks. With these findings, the study recommends that the Nigerian government should be more proactive and tenacious in implementing environmental and trade policies in favour of a cleaner economy. Also, the Nigerian government must become keener toward attracting only investors that will produce clean goods and not compromise on the necessity to improve environmental quality.
Natural resources conservation and research, 2023
This study aims to investigate the impacts of economic growth, energy consumption, and financial development on carbon emissions within the framework of the environmental Kuznets curve hypothesis for Tunisa from 1970 to 2018. The long-run relationship is examined by applying the autoregressive distributed lag (ARDL) bounds testing procedure to cointegration and error correction analysis. The empirical findings show a positive monotonic relationship between real GDP and carbon dioxide emissions (CO 2), which means that Tunisia has not yet reached the required level of per capita income to get an inverted U-shaped EKC. The results also reveal a positive impact on both the energy consumption and the financial development, suggesting that theses control variables lead to environmental damages by polluting the atmosphere in the long run. At the same time, the paper explores causal links between the variables by referring to the Toda and Yamamoto (1995) Causality Test, and it concludes that financial development and energy consumption play a vital role in the Tunisian economy to achieve sustainable environmental development. Therefore, policy makers should not only focus on economic development, but also undertake a solid green finance regulation to assume an active environmentally friendly processes, and the energy matrix should be transformed in favor of renewable energy to cope with environmental degradation and to ensure sustainable development in Tunisia.
Economic Studies Journal, 2019
This paper has explored the role of electricity consumption financial development and trade openness on the CO 2 emissions. The study utilizes annual data from 1972 to 2014 and employs various robust econometric techniques. Our analysis reveals that there is no long-term relationship financial development, trade openness and CO 2 emission. However, the short-run analysis indicates significant relationship among the variables. The results also reveal that the bidirectional relationship between electricity consumption and CO 2 emissions, and a unidirectional causality from financial development to CO 2 emissions. Our results imply that policies that will promote renewable energy consumption and financial development can be pursued concurrently.
SSRN Electronic Journal
This study investigates the effect of manufacturing activities and economic openness on CO 2 emissions in Ghana for the period 1975 to 2014 using WDI data of the subsector. We conducted the Bayer and Hanck combined cointegration test to examine the short run and long run relationship. The ARDL bounds test was conducted to test the robustness of results. In this study, we accounted for the non-linearity of the production-emission relationship by modelling the environmental impact parameter which represented the contribution of foreign technology to environmental quality. This allowed us to test for the Environmental Kuznets Curve (EKC) hypothesis between the subsector's development and its emissions of CO 2 and we used the Lind and Mehlum second order test to confirm an inverted U-shape relationship. The results revealed that manufacturing trade positively affects the sector's emission of CO 2 in the long and short run. The results also suggest a positive relationship between manufacturing production and CO 2 emissions in Ghana and further analysis revealed an inverted U relationship which peaks early. Finally, there is no significant relationship between FDI inflows and the manufacturing sector and its CO 2 emissions. Our findings highlighted the need for trade and industrial policies that prevent the dumping of manufacturing goods in Ghana while promoting local production of environmentally friendly manufacturing goods.
ECONOMIC GROWTH AND CARBON DIOXIDE EMISSION IN NIGERIA
Oyeranti Olugboyega Alabi, 2021
Environmental degradation measured by CO2 emissions is a significant challenge to sustainable economic development. Owing to the significant impact of the empirical relationship between economic growth and CO2 emissions, this study examined the relationship between economic growth and carbon dioxide emission with a view to testing the validity or otherwise of the Environmental Kuznets Curve (EKC) in Nigeria. Using Autoregressive Distributed Lags (ARDL) approach, the study employed data on trade openness, electricity consumption, population and the square of GDP as control variables in the analysis for the period 1970 to 2018. The result showed that electricity consumption and trade openness have a negative and significant relationship with CO2 emission, while population growth has a positive but insignificant impact on CO2 emission. This insignificant impact of population growth can be linked to the lower income of the populace. However, the estimated coefficient of the square of income is negative, while that of its level is positive and thus supports the existence of EKC in Nigeria. Increasing the degree of openness to international trade along with appropriate trade policies will contribute to the Nigerian economy as openness leads to the reduction of pollutants in the environment. Adoption of mixed energy consumption, especially through hydroelectricity and solar system, will drastically reduce the rate of carbon emission in Nigeria regarding the fact that Nigeria is well endowed with these resources.
Does financial development reduce CO 2 emissions in Malaysian economy? A time series analysis
This study deals with the question whether financial development reduces CO 2 emissions or not in case of Malaysia. For this purpose, we apply the bounds testing approach to cointegration for long run relations between the variables. The study uses annual time series data over the period 1971-2008. Ng-Perron stationarity test is applied to test the unit root properties of the series. Our results validate the presence of cointegration between CO 2 emissions, financial development, energy consumption and economic growth. The empirical evidence also indicates that financial development reduces CO 2 emissions. Energy consumption and economic growth add in CO 2 emissions. The Granger causality analysis reveals the feedback hypothesis between financial development and CO 2 emissions, energy consumption and CO 2 emissions and, between CO 2 emissions and economic growth. The present study provides new sights for policy making authorities to use financial sector as an instrument to decline energy emissions.
The objective of this paper is to examine the dynamic impact of urbanization, economic growth, energy consumption, and trade openness on CO2 emissions in Nigeria based on autoregressive distributed lags (ARDL) approach for the period of 1971–2011. The result shows that variables were cointegrated as null hypothesis was rejected at 1 % level of significance. The coefficients of long-run result reveal that urbanization does not have any significant impact on CO2 emissions in Nigeria, economic growth, and energy consumption has a positive and significant impact on CO2 emissions. However, trade openness has negative and significant impact on CO2 emissions. Consumption of energy is among the main determinant of CO2 emissions which is directly linked to the level of income. Despite the high level of urbanization in the country, consumption of energy still remains low due to lower income of the majority populace and this might be among the reasons why urbanization does not influence emissions of CO2 in the country. Initiating more open economy policies will be welcoming in the Nigerian economy as the openness leads to the reduction of pollutants from the environment particularly CO2 emissions which is the major gases that deteriorate physical environment.