Impact Of Financial Development On Environment; A Case Of Low-, Middle- And High-income Countries
Author: Alina Siddiq

Environmental deterioration has been the main cause of interest for together developed and developing countries. Financial Development (FD) is among the primary drivers of strong economic growth and can help in sustainable development. This study seeks to examine the impact of FD on environmental indicators, namely carbon dioxide (CO2), nitrous oxide (N2O), and methane (CH4) in low, middle, and high-income countries for the time of 1990-2018. This study also investigates the presence of pollution haven/pollution halo hypothesis in low, middle, and high-income countries. The empirical findings interestingly showed that FD increases CO2, N2O, and CH4 emissions significantly in low-income countries, whereas in middles income countries, FD raises CO2 and N2O emissions significantly but reduces CH4 emissions. While in high-income countries, FD posits a significant negative impact on CO2 and N2O emissions, whereas an insignificant impact was found on CH4. Regarding Foreign Direct Investment (FDI), pollution haven hypothesis prevails in low-income countries (CO2), and in middle-income countries (CO2 and N2O). Whereas in high-income countries, pollution halo hypothesis exists (CO2). The observed findings of research recommend that stronger environmental regulations should accompany FDI, and the financial sector should be obliged to dedicate more resources for clean energy projects. Supervisor:-Dr. Iftikhar Ahmad

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Keywords : Environmental Deterioration, Environmental Indicators, Financial Development, Pollution Halo Hypothesis., Pollution Haven Hypothesis
Supervisor: Iftikhar Ahmad

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