Does financial structure affect CO2 emissions? Evidence from G20 countries

This study examines the effect of financial structure on CO2 emissions in G20 countries from 1971 to 2014. The empirical results show significant heterogeneity among developed and developing countries in the effect of financial structure on per capita carbon emissions. The ratio of direct to indirect financing is negatively correlated with per capita carbon emissions in developed countries while it is positively correlated in developing economies. We also find out that the interaction between financial structure and total factor productivity is positively correlated with carbon emissions in developing countries; this finding requires attention in order to achieve green development.