Will financial development and clean energy utilization rejuvenate the environment in BRICS economies?

Abstract

Global warming and environmental degradation caused essentially by changes in climate have attracted enormous surveillance considering the menace of its reverberation on the health of humans during the past two decades. Utilization of energy and financial development (FD) are among the key drivers of climatic change. Thus, using second-generation panel cointegration (the Westerlund, 2007 error-correction model), pooled mean group autoregressive distributive lag model (PMG-ARDL), and the panel dynamic ordinary least square (PDOLS) estimation techniques, the paper scrutinized the nexus between financial development, clean energy usage, economic growth, and environmental quality (proxied by CO 2 emissions) of BRICS countries starting from 1980 to 2018. The findings from the study reveal that economic growth and labor force participation, in the long run, deteriorate the environmental quality by increasing the effusion of carbon. Contrarily, financial development, industrialization, trade openness, and renewable energy usage enhance the environmental quality of BRICS countries in the long run.In the short run, financial development was found to have a significant positive impact on the environmental quality of Brazil, China, and Russia, while it is negative for South Africa and India. The outcome of the PVECM Granger causality test reveals a two-way Granger causality that runs from renewable energy to carbon emissions in the short run. The policy implication of this study is that the government of BRICS countries needs to concentrate on improving their clean energy sources and also work on their industries. The BRICS nations' governments should formulate financial and trade policies that promote a sustainable environment and economic development.

Does the Moderating Role of Financial Development on Energy Utilization Contributes to Environmental Sustainability in GCC Economies?

“…In a study in Brazil, Akinsola et al [33] reported a negative interconnection between FD and environmental degradation using the period from 1983-2017. Furthermore, the work of Zoaka et al [11] emphasized the impact of FD to curb the level of CO 2 emissions.…”

Emission policy thresholds for energy consumption on economic growth in MINT and BRICS countries

“…Agbede et al, (2021) uncovered the moderating effect of FDI and energy usage on carbon emission in BRIC economies using data from 1990 to 2014. Zoaka et al, (2022) unveiled the links between economic growth, labor participation, financial development industrialization, renewable energy, trade openness, and environmental quality in BRICS countries over the period 1980 to 2018. Accordingly, it is apparent when engaged with the extant literature that there are significant differences in methodologies, concepts as well as periodicities between the current study and that of Balsalobre-Lorente et al, (2022), Zoaka et al, (2022), Adebayo andRjoub (2021), andNawaz et al, (2021) among others.…”

“…among others. Recently,Balsalobre-Lorente et al, (2022) unveiled the environmental Kuznets curve (EKC) and pollution haven hypotheses (PHH) in BRICS and MINT countries (Zoaka et al, 2022). found evidence of the long-run relationship between industrialization, financial development, trade, renewable energy, and environmental quality of BRICS countries Aziz et al, (2021).…”

Does environmental sustainability attract foreign investment? Evidence from developing countries

“…2 2 Some other studies have looked at the effect of financial development on environmental degradation (Halkos & Polemis, 2017; Zoaka et al, 2022). …”