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Moderating role of financial development in environmental Kuznets: a case study of Malaysia

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Abstract

This research article aims to investigate the moderating role of financial development in Environmental Kuznets Curve (EKC) in the context of Malaysia for the period 1970–2016. As the time series variables are integrated of different order therefore, Auto-Regressive Distributed Lag (ARDL) model has been employed to estimate the long-run equilibrium relationship among the variables. The results indicate that EKC does exist for Malaysia and financial development has negative impact on carbon emission. Moreover, financial development is found to have significant moderating impact on income environment relation. More financial development brings early turning point of the EKC. The results recommend that financial development can be used as one of the policy measures to reduce the environmental cost of economic growth in Malaysia.

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Authors and Affiliations

  1. Department of Economics, The Islamia University of Bahawalpur (IUB), Bahawalpur, Pakistan

    Abid Rashid Gill

  2. School of Economics, Finance and Banking, Universiti Utara Malaysia, Sintok 06010, Kedah, Malaysia

    Sallahuddin Hassan

  3. Taylor’s Business School (TBS), Taylor’s University Lakeside campus, 1 Jalan Taylors, Subang Jaya, Selangor, Malaysia

    Muhammad Haseeb

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  1. Abid Rashid Gill
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  2. Sallahuddin Hassan
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  3. Muhammad Haseeb
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Correspondence to Abid Rashid Gill.

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Gill, A.R., Hassan, S. & Haseeb, M. Moderating role of financial development in environmental Kuznets: a case study of Malaysia. Environ Sci Pollut Res 26, 34468–34478 (2019). https://doi.org/10.1007/s11356-019-06565-1

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