Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach
The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial developme...
| Main Authors: | , , , |
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| Format: | info:eu-repo/semantics/article |
| Language: | English |
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MDPI
2020
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| Subjects: | |
| Online Access: | http://hdl.handle.net/10835/8473 |
| _version_ | 1789406769941839872 |
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| author | Ahmed, Farhan Kousar, Shazia Pervaiz, Amber Ramos Requena, José Pedro |
| author_facet | Ahmed, Farhan Kousar, Shazia Pervaiz, Amber Ramos Requena, José Pedro |
| author_sort | Ahmed, Farhan |
| collection | DSpace |
| description | The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial development, institutional quality, and environmental degradation. Third, the study examines the asymmetric relationship between financial development, institutional quality, and environmental sustainability. For this purpose, the study utilized the data of Pakistan from 1996 to 2018. The study applied Augmented Dickey–Fuller (ADF), Phillips Parron (PP) and Zivote, and Andrews unit root test to check the properties of stationarity of the data. This study applied the Auto Regressive Distributive Lags (ARDL) model to investigate symmetric relationships while the Non-Linear Auto Regressive Distributive Lag Model (NARDL) approach is utilized to investigate the asymmetric relationship among variables. ARDL bounds testing approach utilized to investigate long-run co-integration while short-run dynamics have been investigated by applying the error correction method (ECM). This study found the significant long-run symmetric and asymmetric association of institutional quality (IQ) and financial development (FD) with environmental degradation (ED) and environmental sustainability. However, IQ- has an insignificant association with environmental sustainability. Moreover, dynamic multiplier analysis indicates that positive shock to FD and IQ has a stronger impact on environmental degradation while a positive or negative shock to FD; both have a stronger impact on environmental sustainability. However, a positive or negative shock to IQ has a smaller impact on environmental sustainability. Moreover, the study also found a significant long-run symmetric association of trade openness with environmental degradation and environmental sustainability. This study suggests that the quality of institutions, financial development, and trade openness is necessary to enhance the quality of the environment. |
| format | info:eu-repo/semantics/article |
| id | oai:repositorio.ual.es:10835-8473 |
| institution | Universidad de Cuenca |
| language | English |
| publishDate | 2020 |
| publisher | MDPI |
| record_format | dspace |
| spelling | oai:repositorio.ual.es:10835-84732023-04-12T19:11:03Z Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach Ahmed, Farhan Kousar, Shazia Pervaiz, Amber Ramos Requena, José Pedro financial development quality of institutions environment degradation environment sustainability NARDL ARDL The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial development, institutional quality, and environmental degradation. Third, the study examines the asymmetric relationship between financial development, institutional quality, and environmental sustainability. For this purpose, the study utilized the data of Pakistan from 1996 to 2018. The study applied Augmented Dickey–Fuller (ADF), Phillips Parron (PP) and Zivote, and Andrews unit root test to check the properties of stationarity of the data. This study applied the Auto Regressive Distributive Lags (ARDL) model to investigate symmetric relationships while the Non-Linear Auto Regressive Distributive Lag Model (NARDL) approach is utilized to investigate the asymmetric relationship among variables. ARDL bounds testing approach utilized to investigate long-run co-integration while short-run dynamics have been investigated by applying the error correction method (ECM). This study found the significant long-run symmetric and asymmetric association of institutional quality (IQ) and financial development (FD) with environmental degradation (ED) and environmental sustainability. However, IQ- has an insignificant association with environmental sustainability. Moreover, dynamic multiplier analysis indicates that positive shock to FD and IQ has a stronger impact on environmental degradation while a positive or negative shock to FD; both have a stronger impact on environmental sustainability. However, a positive or negative shock to IQ has a smaller impact on environmental sustainability. Moreover, the study also found a significant long-run symmetric association of trade openness with environmental degradation and environmental sustainability. This study suggests that the quality of institutions, financial development, and trade openness is necessary to enhance the quality of the environment. 2020-09-28T07:08:44Z 2020-09-28T07:08:44Z 2020-09-22 info:eu-repo/semantics/article 2071-1050 http://hdl.handle.net/10835/8473 en https://www.mdpi.com/2071-1050/12/18/7812 Attribution-NonCommercial-NoDerivatives 4.0 Internacional http://creativecommons.org/licenses/by-nc-nd/4.0/ info:eu-repo/semantics/openAccess MDPI |
| spellingShingle | financial development quality of institutions environment degradation environment sustainability NARDL ARDL Ahmed, Farhan Kousar, Shazia Pervaiz, Amber Ramos Requena, José Pedro Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title | Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title_full | Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title_fullStr | Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title_full_unstemmed | Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title_short | Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach |
| title_sort | financial development, institutional quality, and environmental degradation nexus: new evidence from asymmetric ardl co-integration approach |
| topic | financial development quality of institutions environment degradation environment sustainability NARDL ARDL |
| url | http://hdl.handle.net/10835/8473 |
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