Environmental sustainability and financial development in Africa; does institutional quality play any role?. Issue 1 (1st January 2020)

• Record Type: Journal Article
• Authors: Ntow-Gyamfi, Matthew; Bokpin, Godfred A.; Aboagye, Anthony Q. Q.; Ackah, Charles Godfred
• Is Part Of: Development studies research. Volume 7:Issue 1(2020)
• Page Start: 93
• Page End: 118
• Publication Date: 2020-01-01
• Subjects: EKC -- environmental sustainability -- financial development -- institutional quality -- Africa; Economic development -- Periodicals; Economic development -- Research -- Periodicals; Economic development -- Social aspects -- Research -- Periodicals; Developing countries -- Economic conditions -- Periodicals; 338.9
• DOI: 10.1080/21665095.2020.1798261
• Languages: English
• ISSNs: 2166-5095

Abstract

ABSTRACT: The Environmental Kuznets Curve (EKC) having been used to explain the relationship between growth and environmental degradation has gained some attention in the finance literature in recent times. In this study, we re-conceptualize the EKC into a Financial Market Environmental Kuznets Curve (FMECK) that explains the relationship between financial development and sustainability, while introducing institutional quality as a moderator. The study posits that there is an Environmental Kuznets Curve for Africa and that the EKC holds for financial development and sustainability. Institutional Quality and Regulatory framework moderate the finance – sustainability nexus, which leads to the conceptualization of FMEKC. We find an inverted 'U' relationship between financial development and environmental degradation, which we explain using three arguments. We document that having a robust institutional framework in place could reduce the long-run adverse effects of financial development on the environment.