Environmental Risk and Foreign Direct Investment: the role of Financial Sector Development

Yiadom, Eric Boachie; Mensah, Lord; Bokpin, Godfred A.

doi:10.1016/j.envc.2022.100611

Cited by 24 publications

(15 citation statements)

References 53 publications

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“…This helps in explaining whether the curvature of the economy and carbon emissions is an inverted “U” shape or otherwise. According to the literature, the strategy is to incorporate the squared term of financial development (Yiadom et al ., 2022; Acheampong, 2019; Shahbaz et al ., 2016; Tamazian et al ., 2009). However, Seo et al .…”

Section: Resultsmentioning

confidence: 99%

“…This helps in explaining whether the curvature of the economy and carbon emissions is an inverted "U" shape or otherwise. According to the literature, the strategy is to incorporate the squared term of financial development (Yiadom et al, 2022;Acheampong, 2019;Shahbaz et al, 2016;Tamazian et al, 2009). However, Seo et al (2019) and Seo and Shin (2016) believe that this method is arbitrary and potentially ineffective since it puts the threshold on the model even in situations where there are none.…”

Section: Examining the Threshold Effect Of Financial Development On C...mentioning

confidence: 99%

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Analyzing financial and economic development thresholds for carbon emission reduction: a dynamic panel regime-switching study across income levels

Yiadom

Mensah

Bokpin

et al. 2023

MEQ

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PurposeThis research investigates the threshold effects of the interplay between finance, development and carbon emissions across 97 countries, including 50 low-income and 47 high-income countries, during the period from 1991 to 2019.Design/methodology/approachEmploying various econometric modeling techniques such as dynamic linear regression, dynamic panel threshold regression and in/out of sample splitting, this study analyzes the data obtained from the World Bank's world development indicators.FindingsThe results indicate that low-income countries require a minimum financial development threshold of 0.354 to effectively reduce carbon emissions. Conversely, high-income countries require a higher financial development threshold of 0.662 to mitigate finance-induced carbon emissions. These findings validate the presence of a finance-led Environmental Kuznet Curve (EKC). Furthermore, the study highlights those high-income countries exhibit greater environmental concern compared to their low-income counterparts. Additionally, a minimum GDP per capita of US$ 10,067 is necessary to facilitate economic development and subsequently reduce carbon emissions. Once GDP per capita surpasses this threshold, a rise in economic development by a certain percentage could lead to a 0.96% reduction in carbon emissions across all income levels.Originality/valueThis study provides a novel contribution by estimating practical financial and economic thresholds essential for reducing carbon emissions within countries at varying levels of development.

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Section: Resultsmentioning

confidence: 99%

Section: Examining the Threshold Effect Of Financial Development On C...mentioning

confidence: 99%

Analyzing financial and economic development thresholds for carbon emission reduction: a dynamic panel regime-switching study across income levels

Yiadom

Mensah

Bokpin

et al. 2023

MEQ

View full text Add to dashboard Cite

show abstract

“…The indicators chosen for assessing the development of the bank market, debt market, stock market and the overall financial sector are grounded in the existing literature, particularly the works of Yiadom et al (2023a), Ozili (2023), Yiadom et al (2022) and Sahay et al (2015).…”

Section: Methodsmentioning

confidence: 99%

“…Environmental considerations are addressed by Boachie-Yiadom and Mensah (2021), who study the interplay between environmental risk, FDI and tax reforms. Furthermore, Yiadom et al (2022) delve into the role of financial sector development in the connection between environmental risk and FDI. Yalley et al (2018) contribute to the discussion by examining the beneficiaries of bank recapitalization in Ghana.…”

Section: Theoretical Relevance Empirical Evidence and Hypotheses Form...mentioning

confidence: 99%

Financial inclusion: a catalyst for financial system development in emerging and frontier markets

Ofosu-Mensah Ababio,

Yiadom,

Sarpong-Kumankoma

et al. 2023

JFEP

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Purpose This study aims to examine the relationship between financial inclusion and financial system development in emerging and frontier markets. Design/methodology/approach Using data across 35 countries over 19 years (2004–2022), the improved GMM estimation technique reveals that financial inclusion significantly contributes to the development of financial systems. Findings The study uses a segmented approach, dividing financial development indices into subindices: financial depth, financial access and financial efficiency. Indicators of bank financial inclusion show a positive and highly significant relationship with bank depth and access but a negative relationship with bank efficiency. Similarly, indicators of the debt market and stock market financial inclusion demonstrate positive relationships with market depth and access but negative relationships with debt and stock market efficiency. The study further examines composite indexes of financial inclusion for bank, debt and stock market segments, finding strong and highly significant relationships with market development. These results underscore the importance of promoting financial inclusion across all segments of the financial sector to achieve an inclusive financial system. Practical implications The implications of this research highlight the need for policymakers and practitioners to implement policies and regulations that enhance financial inclusion and foster the development of robust financial systems. By extending access to mainstream financial instruments and services, financial institutions can stimulate financial intermediation and support, thereby accelerating the development of the banking, debt and stock markets. Originality/value The study is robust to the use of several indicators of financial inclusion and financial development, and it forms part of the early studies that examine the close relationship between the two variables.

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“…Similar to later papers, this study’s findings reveal that political uncertainty exerts a negative influence on stock market size, liquidity and transaction costs. This observation is consistent with prior research that has highlighted how political uncertainties can disrupt financial markets by affecting investor sentiment and trading activity (Baker et al ., 2021; Xu et al ., 2023; Bekaert et al ., 2023; Yiadom et al. , 2022, 2023; Vassiliades et al.…”

Section: Literature Reviewmentioning

confidence: 99%

Political change, elections, and stock market indicators: a generalized method of moment analysis

Yiadom,

Tay,

Sefe

et al. 2023

JHASS

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PurposeThe performance of financial markets is significantly influenced by the political environment during general elections. This study investigates the effect of general elections on stock market performance in selected African markets.Design/methodology/approachPrior studies have been inconsistent in determining whether electioneering events negatively or positively influence stock market performance. The study utilized panel data set with annual observations from 1990 to 2020. The generalized method of moments (GMM) is employed to investigate the effect of electioneering and change in government on key stock market performance indicators, including stock market capitalization, stock market turnover ratio and the value of stock traded.FindingsThe study finds that electioneering activities generally have a positive impact on the performance of the stock market, whereas a change in government has a negative impact. As a result, the study recommends that stakeholders of the stock market remain vigilant and actively monitor electioneering events to devise and implement effective policies aimed at mitigating political risks during general elections. By adopting these measures, investor confidence can be significantly enhanced, fostering a more robust and secure investment environment.Originality/valueThe study investigates a neglected section of the literature by highlighting not only the effect of elections on stock market indicators but also possible change in government during elections.

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Environmental Risk and Foreign Direct Investment: the role of Financial Sector Development

Cited by 24 publications

References 53 publications

Analyzing financial and economic development thresholds for carbon emission reduction: a dynamic panel regime-switching study across income levels

Analyzing financial and economic development thresholds for carbon emission reduction: a dynamic panel regime-switching study across income levels

Financial inclusion: a catalyst for financial system development in emerging and frontier markets

Political change, elections, and stock market indicators: a generalized method of moment analysis

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