Does financial development affect environmental degradation? Evidence from the OECD countries. Business Strategy and the Environment DOI: 10.1002/bse.1976
Does financial development affect environmental degradation? Evidence from the OECD countries. Business Strategy and the Environment, 26(8): 1162-1180 (SCOPUS, ISI Listed. Impact factor: 3.479 and 5-year: 3,451). In common with Μ. Polemis (2017).
In this study, building a simple model that incorporates static and dynamic elements, the relationship of financial development and economic growth on the environmental degradation is investigated together with the validation of the Environmental Kuznets Curve (EKC) hypothesis. Our analysis is based on an unbalanced panel data set covering the OECD countries over the period 1970-2014. Our approach strongly accounts for the presence of cross-sectional dependence between the sample variables and utilizes second generation panel unit root tests in order to investigate possible cointegration relationships. The empirical findings do indicate that local (NOX per capita emissions) and global (CO2 per capita emissions) pollutants redefine the EKC hypothesis when we account for the presence of financial development indicators. Specifically, in the case of global pollution an N-shape relationship is evident both in static and dynamic framework with a very slow adjustment. Lastly, the new econometrical methods related to the unit root and cointergration tests can be considered as another robustness check of the EKC hypothesis.