Modeling the dynamic linkage between financial development, energy innovation, and environmental quality: Does globalization matter?

In the modern era of the wave of globalization, financial development is leading toward a higher rate of economic expansion and promoting energy innovation around the globe. Nevertheless, environmental impact of financial development has preoccupied government officials to circumvent adverse impact...

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Bibliographic Details
Published in:Business strategy and the environment 2021-01, Vol.30 (1), p.176-184
Main Authors: Baloch, Muhammad Awais, Ozturk, Ilhan, Bekun, Festus Victor, Khan, Danish
Format: Article
Language:English
Subjects:
Cooperation
Economic development
Economic growth
Economics
Energy
energy innovation
Environmental impact
Environmental Kuznets curve
Environmental quality
financial development
Globalization
Greenhouse gases
Heterogeneity
Innovations
Kuznets curve
OECD countries
Pollution
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Summary:In the modern era of the wave of globalization, financial development is leading toward a higher rate of economic expansion and promoting energy innovation around the globe. Nevertheless, environmental impact of financial development has preoccupied government officials to circumvent adverse impact on environmental quality. Thus, this paper examines the nexus between financial development, economic growth, energy innovation, and environmental pollution for the period of 1990–2017 for the panel of Organization for Economic Cooperation and Development (OECD) countries. To obtain robust and unbiased results, this study utilizes Pooled Mean Group Autoregressive Distributed Lag (PMG/ARDL) estimator that counters the issue of heterogeneity and cross‐sectional dependence. Empirical evidence suggests that financial development promotes energy innovation and improves environmental quality. Globalization also has a long‐term relationship with energy innovation and reduces greenhouse gas (GHG) emissions. Moreover, findings validate the environmental Kuznets curve for OECD countries in the significance of financial development, globalization, and energy innovation.
ISSN:0964-4733
1099-0836
DOI:10.1002/bse.2615