{"title":"Environmental Degradation and Financial Development Nexus in BRICS PLUS Countries: Do Financial Development Drivers Make a Difference?","authors":"Dhouha Dridi, Radhouane Hasni, Montassar KahiA","doi":"10.1007/s13132-024-02266-4","DOIUrl":null,"url":null,"abstract":"<p>The BRICS group is striving to create a new economic and financial paradigm, thereby heightening the importance of financial issues among its members. This group has recently expanded to include new members, some of whom are among the top ten producers of fossil fuels, while others are densely populated. As a result, the BRICS nations face increased challenges and responsibilities regarding environmental degradation. Given this context, it is crucial to evaluate the influence of financial development and its main drivers on environmental outcomes. To achieve this, we have categorized the financial development drivers into three groups: economic, institutional, and productivity-related factors. We then explored how financial development interacts with environmental degradation, with a particular focus on the role of these drivers as effective moderators within the expanded BRICS group. Our analysis uses the cross-sectional autoregressive distributed lag (CS-ARDL) methodology for a period spanning from 2000 to 2021. The empirical results show that in all cases, the interaction between financial development and its drivers reduces CO<sub>2</sub> emissions. This interaction benefits from the direct negative effect of financial development. For instance, the interaction between economic growth or capital formation and financial development improves environmental quality, reversing the initially positive direct effect of these factors on emissions. Moreover, for other factors—such as trade openness, government expenditure, control of corruption, human development, and technological innovation—their interaction with financial development creates a synergy that enhances their initially positive direct effect on emission reduction, except for trade openness, which initially had no significant effect. Based on our empirical findings, we have formulated several policy recommendations to address these issues.</p><h3 data-test=\"abstract-sub-heading\">Graphical Abstract</h3><p>Direct and indirect effects of financial development on CO2 emissions for BRICS PLUS countries in the long run.</p>\n","PeriodicalId":47435,"journal":{"name":"Journal of the Knowledge Economy","volume":"6 1","pages":""},"PeriodicalIF":4.0000,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of the Knowledge Economy","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s13132-024-02266-4","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
The BRICS group is striving to create a new economic and financial paradigm, thereby heightening the importance of financial issues among its members. This group has recently expanded to include new members, some of whom are among the top ten producers of fossil fuels, while others are densely populated. As a result, the BRICS nations face increased challenges and responsibilities regarding environmental degradation. Given this context, it is crucial to evaluate the influence of financial development and its main drivers on environmental outcomes. To achieve this, we have categorized the financial development drivers into three groups: economic, institutional, and productivity-related factors. We then explored how financial development interacts with environmental degradation, with a particular focus on the role of these drivers as effective moderators within the expanded BRICS group. Our analysis uses the cross-sectional autoregressive distributed lag (CS-ARDL) methodology for a period spanning from 2000 to 2021. The empirical results show that in all cases, the interaction between financial development and its drivers reduces CO2 emissions. This interaction benefits from the direct negative effect of financial development. For instance, the interaction between economic growth or capital formation and financial development improves environmental quality, reversing the initially positive direct effect of these factors on emissions. Moreover, for other factors—such as trade openness, government expenditure, control of corruption, human development, and technological innovation—their interaction with financial development creates a synergy that enhances their initially positive direct effect on emission reduction, except for trade openness, which initially had no significant effect. Based on our empirical findings, we have formulated several policy recommendations to address these issues.
Graphical Abstract
Direct and indirect effects of financial development on CO2 emissions for BRICS PLUS countries in the long run.
期刊介绍：
In the context of rapid globalization and technological capacity, the world’s economies today are driven increasingly by knowledge—the expertise, skills, experience, education, understanding, awareness, perception, and other qualities required to communicate, interpret, and analyze information. New wealth is created by the application of knowledge to improve productivity—and to create new products, services, systems, and process (i.e., to innovate). The Journal of the Knowledge Economy focuses on the dynamics of the knowledge-based economy, with an emphasis on the role of knowledge creation, diffusion, and application across three economic levels: (1) the systemic ''meta'' or ''macro''-level, (2) the organizational ''meso''-level, and (3) the individual ''micro''-level. The journal incorporates insights from the fields of economics, management, law, sociology, anthropology, psychology, and political science to shed new light on the evolving role of knowledge, with a particular emphasis on how innovation can be leveraged to provide solutions to complex problems and issues, including global crises in environmental sustainability, education, and economic development. Articles emphasize empirical studies, underscoring a comparative approach, and, to a lesser extent, case studies and theoretical articles. The journal balances practice/application and theory/concepts.
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