Environmental Science and Pollution Research

, Volume 26, Issue 3, pp 2253–2269 | Cite as

Impact of financial development and economic growth on environmental quality: an empirical analysis from Belt and Road Initiative (BRI) countries

  • Shah SaudEmail author
  • Songsheng Chen
  • Danish
  • Abdul Haseeb
Research Article


This study aims to analyze the impact of financial development, foreign direct investment, economic growth, electricity consumption, and trade openness on environmental quality for a panel of 59 Belt and Road Initiative (BRI) countries, over the period of 1980–2016. The presence of the environmental Kuznets curve (EKC) hypothesis is investigated. The cross-sectional augmented Dickey-Fuller (CADF) and cross-sectional Im, Pesaran, and Shin panel unit root test; the Westerlund cointegration test, the dynamic seemingly unrelated regression (DSUR) approach; and the Dumitrescu and Hurlin (Econ Model 29:1450–1460, 2012) panel causality approach are employed. It is found that the analyzed variables are stationary at first differences and are cointegrated. It is also found that an increase in financial development, foreign direct investment, and trade openness enhance environmental quality, while the increase in economic growth and electricity consumption degrade environmental quality. The presence of the EKC hypothesis for the selected panel countries is validated. Furthermore, the Dumitrescu-Hurlin (DH) panel causality test result confirmed the presence of bidirectional causality among economic growth, foreign direct investment, financial development, electricity consumption, and trade openness with environmental quality.


Financial development Economic growth Environmental quality EKC DSUR Belt and Road Initiative (BRI) 



The authors wish to thank to the responsible editor: Dr. Muhammad Shahbaz and anonymous reviewers’ referees for their constructive and valuable comments for enhancing the quality of the paper. This work is a research achievement of the National Natural Science Foundation of China under the project of (NSFC-71672009.71372016).


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© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina
  2. 2.School of Economics and Trade, Guangdong University of Foreign StudiesGuangzhouChina

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