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Do financial development, financial stability and renewable energy disturb carbon emissions? Evidence from asia–pacific economic cooperation economics

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Abstract

The present paper investigates the influence of renewable energy consumption (REC), economic growth (GDP), financial development index (FDI), z-score (ZS) and control of corruption (CC) on carbon dioxide (CO2) emissions, for eighteen different APEC economies over the period 2000–2019 using the Pooled Mean Group-Autoregressive Distributed Lags (PMG-ARDL) approach and Granger causality tests. The outcomes of the empirical study confirm that the variables are cointegration using Pedroni tests. The long-run estimates revealed that economic growth and renewable energy contribute to the huge of carbon emissions, while financial development, ZS and CC lead to decrease carbon emissions. Granger causality shows that, in the long-run, there is bidirectional causality between CO2 emissions, economic growth, and financial development. In the short-run and for basic variables, Granger shows a unidirectional causality from CO2 emissions and economic growth to REC and; unidirectional causality from financial development, ZC and CC to CO2 emissions. A comprehensive approach is needed in APEC countries to effectively reduce CO2 emissions and promote sustainable development, including encouraging green financial products, reinforcing financial regulations, transitioning to a low-carbon economy, enhancing renewable energy usage, and improving governance and institutional quality, while considering the distinctive characteristics of each country.

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Data availability

The datasets analyzed during the current study are available in the Energy Information Administration and the Word Bank Development Indicators.

The datasets used during the current study are available from the corresponding or first author on reasonable request.

Notes

  1. APEC members countries: Australia, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, Peru, Philippines, Russia, Singapore, South Korea, Thailand, United States, Vietnam, New Zealand, Brunei Darussalam, Papua New Guinea, Chinese Taipei.

  2. https://databank.worldbank.org/metadataglossary/global-financial-development/series/GFDD.SI.01

  3. APEC countries were selected because of their heterogeneous levels of financial development and CO2 emissions, not to mention that the five largest CO2 emitters in the world are all members of APEC: China, the United States, India, Russia and Japan. The more developed members have sophisticated financial systems and are responsible for a large share of global CO2 emissions, while the less developed members have less developed financial systems and have lower CO2 emissions. Nevertheless, some APEC members -such as Australia and New Zealand- have taken significant steps to diminish their GHG emissions and encourage the transition to renewable energy sources.

  4. All estimation of Descriptive statistics are made before logarithmic transformation.

  5. According to the AIC and SIC, the maximum number of lags are estimated to one.

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Authors and Affiliations

  1. ESC de Tunis, University of Manouba, Manouba, Tunisia

    Radhouane Hasni & Dhouha Dridi

  2. QUARG UR17ES26, ESCT, Campus University of Manouba, 2010, Tunis, Tunisia

    Radhouane Hasni & Mehdi Ben Jebli

  3. FSJEG Jendouba, University of Jendouba, Jendouba, Tunisia

    Mehdi Ben Jebli

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  1. Radhouane Hasni
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  2. Dhouha Dridi
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  3. Mehdi Ben Jebli
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All authors contributed to the study’s conception and design. Material preparation, data collection, and analysis were performed by Dhouha Dridi. Radhouane Hasni write the introduction and the literature review sections and Mehdi Ben Jebli approved the final submitted version of the manuscript.

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Correspondence to Mehdi Ben Jebli.

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Hasni, R., Dridi, D. & Ben Jebli, M. Do financial development, financial stability and renewable energy disturb carbon emissions? Evidence from asia–pacific economic cooperation economics. Environ Sci Pollut Res 30, 83198–83213 (2023). https://doi.org/10.1007/s11356-023-28418-8

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