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Research on the impact of financial development in different regions on the decoupling of carbon emissions from economic growth

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  • Jiemin Huang
  • Liyiing Guo

Abstract

The decoupling of carbon emissions has also become the dependence of countries’ development. Finance plays an important role in decoupling economic development from carbon emissions. This paper explores the impact of financial development in different regions on the decoupling of carbon emissions from economic growth, using the Tapio decoupling elastic model and the method of fully modified least squares (FMOLS) to study the impact of financial development on carbon emissions in six regional panels from 1995 to 2020: and Foreign direct investment (FDI), urbanization, population, and infrastructure as control variables. The results turn out that financial development will promote the decoupling of carbon emissions from economic growth in the ECA region. For EAP, SSA, AC, SA, and MENA regions, financial development will promote the growth of carbon emissions, and due to the different economic development dynamics of different countries, the positive effects of financial development on carbon emissions are heterogeneous. The impact of FDI, urbanization, and infrastructure on carbon emissions varies from region to region. The population will promote the growth of carbon emissions, regardless of the region. In addition, the ECA region is the most countries that has achieved the strong decoupling and is the first to realize the transition from weak decoupling to strong decoupling. Therefore,the ECA, EAP and AC region should accelerate the construction of a green financial system to promote the decoupling of economic growth and carbon emissions. The SSA, SA and MENA region should speed up the transformation of economic development mode and move towards weak decoupling or even strong decoupling.

Suggested Citation

  • Jiemin Huang & Liyiing Guo, 2023. "Research on the impact of financial development in different regions on the decoupling of carbon emissions from economic growth," Energy & Environment, , vol. 34(6), pages 2007-2030, September.
    • Handle: RePEc:sae:engenv:v:34:y:2023:i:6:p:2007-2030
    DOI: 10.1177/0958305X221107341
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    2. Adel Ben Youssef & Mounir Dahmani & Mohamed Mabrouki, 2024. "Decoupling carbon emissions and economic growth in Tunisia: pathways to sustainable development," Chapters, in: Mohamed Arouri & Mathieu Gomes (ed.), Handbook on Energy and Economic Growth, chapter 5, pages 103-127, Edward Elgar Publishing.
    3. Muntasir Murshed & Ilhan Ozturk & Avik Sinha & Mohammad Mahtab Alam, 2024. "RETRACTED ARTICLE: Achieving environmental sustainability through renewable energy transition in the Next Eleven countries: the importance of establishing sound democratic governance," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-24, April.
    4. Beatrice Chinyere Eneje & Chinazaekpere Nwani & Kingsley Ikechukwu Okere & Benedette Nneka Okezie & Ali Roseline Oko, 2025. "Finance and the environment: The eco‐impact of market‐ and institution‐driven development in Africa using land‐use‐adjusted metrics across sources of greenhouse gases," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 2204-2224, August.

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