Environmental Kuznets Curve (EKC): Empirically Examined Long Run Association Between Globalization, Financial Development and CO2 Emission for ASEAN Countries

Abstract

This study mainly inspects the effect of globalization and financial expansion on CO2 emissions in the existence of the EKC (Environmental Kuznets Curve) framework for ASEAN economies, firstly the study employs the cross-sectional dependence econometric test. Results of CADF, CIPS unit root test, LM test, panel Kao Cointegration, Johansen Fisher test and Panel ARDL investigation revealed that (i) the hypothesis of EKC supports in ASEAN economies (ii) financial expansion and consumption of energy subsidize to the Co2 productions while urbanization has positive and globalization negative affiliation with carbon dioxide emissions (iii) the data is heterogeneous and cross-sectional dependence test confirms that there exit cross sections dependency (iv) Co-integration test confirms that variables are co-integrated, urbanization has an order of integration is I(0) and a square of GDP, economic development, globalization, financial expansion, use of energy and CO2 emission have an order of integration is I(1). Moreover, it is recommended that the authorities of ASEAN economies give some special consideration to the globalization level. Since better institutional reforms, institutional quality is vital to upsurge financial development and globalization improved financial growth.