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Asymmetric Effects of Financial Development on CO 2 Emissions in Bangladesh

Author

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  • Anupam Das

    (Department of Economics, Justice, and Policy Studies, Mount Royal University, Calgary, AL T3E 6K6, Canada)

  • Leanora Brown

    (Finance and Economics, Gary W. Rollins College of Business, University of Tennessee at Chattanooga, Chattanooga, TN 37403, USA)

  • Adian McFarlane

    (School of Management, Economics, and Mathematics, King’s University College at Western University Canada, London, ON N6A 2M3, Canada)

Abstract

Depending on how it functions and is organized, the financial system can have a negative, positive, or zero impact on the environment. For Bangladesh, the empirical relationship between financial development and the environment, measured in terms of carbon dioxide (CO 2 ) emissions per capita, is analysed over the period 1980 to 2020. This is the first such analysis for this country. We perform this within a non-linear bound testing framework while controlling for changes in energy consumption, gross domestic product, and trade volume. There are two key findings. One, we find that the relationship between CO 2 emissions per capita and financial development is cointegrating, with the direction of cointegration running from financial development to CO 2 emissions. Two, we find that positive and negative changes in financial development have asymmetric impacts on CO 2 emissions in the long and short run. The implications of these findings are discussed regarding their attendant environmental policy implications.

Suggested Citation

  • Anupam Das & Leanora Brown & Adian McFarlane, 2023. "Asymmetric Effects of Financial Development on CO 2 Emissions in Bangladesh," JRFM, MDPI, vol. 16(5), pages 1-18, May.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:5:p:269-:d:1145713
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    References listed on IDEAS

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