Unveiling the Impact of Income Inequality on CO2 Emissions in Sub-Saharan Africa Countries (SSA)

Carbon dioxide emissions and income disparity have become crucial unclear challenges threatening the environment and humanity over the past three decades. Erstwhile environment studies have claimed that greater energy use contributes to poor environmental quality but ignored the significance of financial development in mediating with income inequality on carbon dioxide or environmental quality. Our study employed both panel autoregressive distributed lag model (ARDL) and causality tests to investigate whether income inequality impacts ????2 emissions and how the interaction between income inequality and financial development impacts ????2emissions in sub-Saharan Africa (SSA) countries from 2004–2019. The findings revealed that financial development and all other control variables except trade/GDP ratio positively impact carbon emission in SSA in the long run. The result shows that the trade/GDP ratio is contrariwise related to carbon emission in SSA. In the short run, all the control variables, income inequality, population density, financial development trade to GDP, energy consumption, per capita income and urbanization, are not statistically significant. In contrast, per capita income, population density and urbanization have an inverse relationship with carbon emission in SSA. The analysis of the interaction between income inequality and financial development on carbon emission revealed that financial development plays a significant role as a moderator in increasing carbon emission coming from income inequality. The study concludes that financial development plays a significant role as a moderator in increasing carbon emissions coming from income inequality. As such, the governments of these SSA nations and other stakeholders should work to combine economic disparity and financial instability to prevent harm to the environment by cutting carbon emissions.