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The effect of financial development and economic growth on ecological footprint: evidence from top 10 emitter countries

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Abstract

This study investigates the effect of financial development and economic growth on ecological footprint by including non-renewable energy consumption and trade openness as additional determinants. For this purpose, annual data of 10 countries with the highest ecological footprint (China, the USA, India, Japan, Brazil, Indonesia, Mexico, Korea, Turkey, and the UK) for the period 1992–2017 is used. The Westerlund and Edgerton (2007) Panel LM bootstrap test results reveal that there is cointegration between the variables. Additionally, the results obtained from the Common Correlated Effects (CCE) coefficient estimator show that financial development, economic growth, and non-renewable energy consumption negatively affect environmental quality by increasing ecological footprint. On other hand, the effect of trade openness on ecological footprint is found to be statistically insignificant. In addition, according to the panel causality test results, a unidirectional causality from financial development to ecological footprint is found while bidirectional causality between economic growth and ecological footprint exists. Therefore, it would be beneficial for policymakers in such countries to direct financial resources to green energy production and consumption and to encourage projects and practices.

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Authors and Affiliations

  1. School of Management and Economics, Beijing Institute of Technology, Beijing, China

    Muhammad Shahbaz

  2. Vocational School of Bozuyuk, Department of Banking and Insurance, Bilecik Seyh Edebali University, Bilecik, Turkey

    Mesut Dogan

  3. Vocational School of Savastepe, Department of Real Estate Management, Balıkesir University, Balıkesir, Turkey

    Hilmi Tunahan Akkus

  4. Vocational School of Zeliha Tolunay, Customs Business Department, Mehmet Akif Ersoy University, Burdur, Turkey

    Samet Gursoy

Authors
  1. Muhammad Shahbaz
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  2. Mesut Dogan
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  3. Hilmi Tunahan Akkus
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  4. Samet Gursoy
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Contributions

Muhammad Shahbaz: conceptualization, methodology, supervision, and writing original draft. Mesut Dogan: supervision, writing—review and editing, and visualization. Hilmi Tunahan Akkus: writing—review and editing. Samet Gursoy: writing—review.

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Correspondence to Mesut Dogan.

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Shahbaz, M., Dogan, M., Akkus, H.T. et al. The effect of financial development and economic growth on ecological footprint: evidence from top 10 emitter countries. Environ Sci Pollut Res 30, 73518–73533 (2023). https://doi.org/10.1007/s11356-023-27573-2

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