TY - JOUR
T1 - Analyzing financial and economic development thresholds for carbon emission reduction
T2 - a dynamic panel regime-switching study across income levels
AU - Yiadom, Eric B.
AU - Mensah, Lord
AU - Bokpin, Godfred A.
AU - Dziwornu, Raymond K.
N1 - Publisher Copyright:
© 2023, Emerald Publishing Limited.
PY - 2024/1/2
Y1 - 2024/1/2
N2 - Purpose: This 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/approach: Employing 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. Findings: The 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/value: This study provides a novel contribution by estimating practical financial and economic thresholds essential for reducing carbon emissions within countries at varying levels of development.
AB - Purpose: This 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/approach: Employing 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. Findings: The 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/value: This study provides a novel contribution by estimating practical financial and economic thresholds essential for reducing carbon emissions within countries at varying levels of development.
KW - Carbon emissions
KW - Dynamic panel threshold
KW - Economic development
KW - Financial development
KW - High-income
KW - Low-income
UR - http://www.scopus.com/inward/record.url?scp=85167889570&partnerID=8YFLogxK
U2 - 10.1108/MEQ-12-2022-0338
DO - 10.1108/MEQ-12-2022-0338
M3 - Article
AN - SCOPUS:85167889570
SN - 1477-7835
VL - 35
SP - 18
EP - 37
JO - Management of Environmental Quality: An International Journal
JF - Management of Environmental Quality: An International Journal
IS - 1
ER -