Environmental Degradation and Financial Development Nexus in BRICS PLUS Countries: Do Financial Development Drivers Make a Difference?

IF 4 3区经济学 Q1 ECONOMICS Journal of the Knowledge Economy Pub Date : 2024-08-27 DOI:10.1007/s13132-024-02266-4

Dhouha Dridi, Radhouane Hasni, Montassar KahiA

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Abstract

The BRICS group is striving to create a new economic and financial paradigm, thereby heightening the importance of financial issues among its members. This group has recently expanded to include new members, some of whom are among the top ten producers of fossil fuels, while others are densely populated. As a result, the BRICS nations face increased challenges and responsibilities regarding environmental degradation. Given this context, it is crucial to evaluate the influence of financial development and its main drivers on environmental outcomes. To achieve this, we have categorized the financial development drivers into three groups: economic, institutional, and productivity-related factors. We then explored how financial development interacts with environmental degradation, with a particular focus on the role of these drivers as effective moderators within the expanded BRICS group. Our analysis uses the cross-sectional autoregressive distributed lag (CS-ARDL) methodology for a period spanning from 2000 to 2021. The empirical results show that in all cases, the interaction between financial development and its drivers reduces CO₂ emissions. This interaction benefits from the direct negative effect of financial development. For instance, the interaction between economic growth or capital formation and financial development improves environmental quality, reversing the initially positive direct effect of these factors on emissions. Moreover, for other factors—such as trade openness, government expenditure, control of corruption, human development, and technological innovation—their interaction with financial development creates a synergy that enhances their initially positive direct effect on emission reduction, except for trade openness, which initially had no significant effect. Based on our empirical findings, we have formulated several policy recommendations to address these issues.

Graphical Abstract

Direct and indirect effects of financial development on CO2 emissions for BRICS PLUS countries in the long run.

Abstract Image

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金砖国家（PLUS）的环境退化与金融发展关系：金融发展驱动因素会产生影响吗？

金砖国家集团正在努力创造一种新的经济和金融模式，从而提高了其成员对金融问题的重视程度。金砖国家集团最近又增加了新成员，其中一些是十大化石燃料生产国，另一些则人口稠密。因此，金砖国家在环境退化方面面临着更多的挑战和责任。在此背景下，评估金融发展及其主要驱动因素对环境结果的影响至关重要。为此，我们将金融发展驱动因素分为三类：经济、制度和生产力相关因素。然后，我们探讨了金融发展与环境退化之间的互动关系，并特别关注了这些驱动因素在扩大的金砖国家集团中的有效调节作用。我们的分析采用了横截面自回归分布滞后（CS-ARDL）方法，时间跨度为 2000 年至 2021 年。实证结果表明，在所有情况下，金融发展及其驱动因素之间的相互作用都会减少二氧化碳排放量。这种相互作用得益于金融发展的直接负效应。例如，经济增长或资本形成与金融发展之间的相互作用改善了环境质量，逆转了这些因素最初对排放的直接正效应。此外，对于其他因素，如贸易开放度、政府支出、腐败控制、人类发展和技术创新，它们与金融发展的互动产生了协同效应，增强了它们最初对减排的直接正效应，但贸易开放度除外，因为它最初没有显著效应。基于我们的实证研究结果，我们提出了解决这些问题的若干政策建议。

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来源期刊

Journal of the Knowledge Economy ECONOMICS-

CiteScore

5.90

自引率

27.30%

发文量

228

期刊介绍： In the context of rapid globalization and technological capacity, the world’s economies today are driven increasingly by knowledge—the expertise, skills, experience, education, understanding, awareness, perception, and other qualities required to communicate, interpret, and analyze information. New wealth is created by the application of knowledge to improve productivity—and to create new products, services, systems, and process (i.e., to innovate). The Journal of the Knowledge Economy focuses on the dynamics of the knowledge-based economy, with an emphasis on the role of knowledge creation, diffusion, and application across three economic levels: (1) the systemic ''meta'' or ''macro''-level, (2) the organizational ''meso''-level, and (3) the individual ''micro''-level. The journal incorporates insights from the fields of economics, management, law, sociology, anthropology, psychology, and political science to shed new light on the evolving role of knowledge, with a particular emphasis on how innovation can be leveraged to provide solutions to complex problems and issues, including global crises in environmental sustainability, education, and economic development. Articles emphasize empirical studies, underscoring a comparative approach, and, to a lesser extent, case studies and theoretical articles. The journal balances practice/application and theory/concepts.