Financial development and environmental degradation: Does political regime matter?. (1st October 2018)

• Record Type: Journal Article
• Authors: Adams, Samuel; Klobodu, Edem Kwame Mensah
• Is Part Of: Journal of cleaner production. Volume 197(2018)Part 1
• Page Start: 1472
• Page End: 1479
• Publication Date: 2018-10-01
• Subjects: Financial development -- Economic growth -- Institutional quality -- Political regime -- Environmental degradation -- Chow test -- Generalized method of moments; Factory and trade waste -- Management -- Periodicals; Manufactures -- Environmental aspects -- Periodicals; Déchets industriels -- Gestion -- Périodiques; Usines -- Aspect de l'environnement -- Périodiques; 628.5
• DOI: 10.1016/j.jclepro.2018.06.252
• Languages: English
• ISSNs: 0959-6526

Abstract

Abstract: The paper examines the determinants of environmental degradation for 26 African countries over the period 1985–2011. Using a wide range of econometric techniques (Chow test, cross-country regressions and the Generalized Method of Moments (GMM)), we find that environmental degradation (measured by CO2 emissions) in 2000–2011 experience a structural change which is far more intense than 1985–1999. Furthermore, cross-country regressions show that economic growth and urbanization are significant determinants of environmental degradation. Financial development, however, is a significant determinant of environmental degradation after accounting for political regime. Finally, the GMM estimator confirms a robust positive link between environmental degradation and economic growth. The policy implications of our findings are discussed in the concluding section. Highlights: Structural change in the period 2000-2011 higher than for period 1985-1999. Economic growth has a significant positive effect on CO2 emissions. Financial development has beneficial effects on CO2 emissions. Policy regime variables improved model fit but no significant effect on CO2 emissions.