Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions

George S. Chen; Emmanuel Kwaku Manu; Dennis Asante

doi:10.1002/sd.2584

journal article Open Access Apr 24, 2023

Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions

George S. Chen

Emmanuel Kwaku Manu

Dennis Asante

Sustainable Development Vol. 31 No. 5 pp. 3272-3290 · Wiley

View at Publisher Save 10.1002/sd.2584

Abstract

AbstractWe investigate the causal impact of the development of financial institutions on environmental sustainability in Africa. Drawing on a distinctive panel data set encompassing 34 countries from 1980 to 2017, with carbon emissions serving as an indicator of environmental sustainability, we discover that enhanced development of financial institutions leads to increased carbon emissions, especially in relation to the depth of these institutions. Furthermore, our study reveals support for the environmental Kuznets curve, heterogenous slopes, and shifts over time in the finance–emissions nexus. Our results remain robust to different model specifications. The conclusions we reach indicate that the development of financial institutions and the implementation of pro‐growth policies are essential for attaining environmental sustainability on the African continent.

Topics

No keywords indexed for this article. Browse by subject →

References

111

[1]

Does economic, financial and institutional developments matter for environmental quality? A comparative analysis of EU and MEA countries

Mehdi Abid

Journal of Environmental Management 10.1016/j.jenvman.2016.12.007

[2]

Modelling for insight: Does financial development improve environmental quality?

Alex O. Acheampong

Energy Economics 10.1016/j.eneco.2019.06.025

[3]

10.1016/j.scitotenv.2019.04.353

[4]

10.1016/j.eneco.2020.104768

[5]

10.1016/j.jclepro.2018.06.252

[6]

10.3390/en15207464

[7]

10.1016/j.enpol.2022.112888

[8]

10.1016/j.jclepro.2018.10.320

[9]

10.1016/j.eneco.2023.106577

[10]

10.1016/j.jclepro.2020.124898

[11]

10.1016/j.bir.2021.03.005

[12]

FDI and economic growth: the role of local financial markets

Laura Alfaro, Areendam Chanda, Sebnem Kalemli-Ozcan et al.

Journal of International Economics 10.1016/s0022-1996(03)00081-3

[13]

Initial progress in implementing the Sustainable Development Goals (SDGs): a review of evidence from countries

Cameron Allen, Graciela Metternicht, Thomas Wiedmann

Sustainability Science 10.1007/s11625-018-0572-3

[14]

Aluko O. A. "Is foreign direct investment globalization‐induced or a myth? A tale of Africa" International Journal of Finance & Economics (2021)

[15]

10.1016/j.scitotenv.2020.141515

[16]

Andrew M. (2000)

[17]

Renewable and non-renewable energy consumption-growth nexus: Evidence from a panel error correction model

Nicholas Apergis, James E. Payne

Energy Economics 10.1016/j.eneco.2011.04.007

[18]

10.1111/joes.12086

[19]

10.1002/sd.1858

[20]

10.1111/j.1465-7287.2012.00338.x

[21]

10.1007/s11356-017-8850-7

[22]

Baltagi B. (2008)

[23]

10.1016/s0378-4266(02)00408-9

[24]

10.1016/0165-1765(88)90046-8

[25]

10.1002/bse.3180

[26]

10.1111/gcbb.12092

[27]

The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics

T. S. Breusch, A. R. Pagan

The Review of Economic Studies 10.2307/2297111

[28]

10.1002/sd.2402

[29]

10.1016/j.renene.2019.01.010

[30]

Chen C.(2009).Bank efficiency in sub‐Saharan African middle income countries. IMF Working Papers 2009. 10.2139/ssrn.1356441

[31]

10.1016/j.jdeveco.2003.03.002

[32]

Čihák M. "Benchmarking financial development around the world" World Bank Policy Research Working Paper (2012)

[33]

10.1596/978-0-8213-6865-7

[34]

The nexus between financial development and energy consumption in the EU: A dynamic panel data analysis

Serap Çoban, Mert Topcu

Energy Economics 10.1016/j.eneco.2013.04.001

[35]

Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages

Matthew A Cole

Ecological Economics 10.1016/j.ecolecon.2003.09.007

[36]

Testing for Cross-Sectional Dependence in Panel-Data Models

Rafael E. De Hoyos, Vasilis Sarafidis

The Stata Journal: Promoting communications on sta... 10.1177/1536867x0600600403

[37]

The effects of financial development on foreign direct investment

Rodolphe Desbordes, Shang-Jin Wei

Journal of Development Economics 10.1016/j.jdeveco.2017.02.008

[38]

Environmental Kuznets Curve Hypothesis: A Survey

Soumyananda Dinda

Ecological Economics 10.1016/j.ecolecon.2004.02.011

[39]

10.1016/j.renene.2016.07.078

[40]

Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy

Eyup Dogan, Fahri Seker

Renewable Energy 10.1016/j.renene.2016.03.078

[41]

Testing for Granger non-causality in heterogeneous panels

Elena-Ivona Dumitrescu, Christophe Hurlin

Economic Modelling 10.1016/j.econmod.2012.02.014

[42]

10.1016/j.worlddev.2008.02.009

[43]

10.1016/j.renene.2022.06.130

[44]

10.1016/j.egyr.2021.12.048

[45]

10.1007/s11356-021-17161-7

[46]

Enders W. (2008)

[47]

10.1016/s0304-3878(02)00084-6

[48]

10.1016/j.jenvman.2021.113617

[49]

Financial development and energy consumption: Is the MENA region different?

Brahim Gaies, Olfa Kaabia, Rim Ayadi et al.

Energy Policy 10.1016/j.enpol.2019.111000

[50]

10.1038/s41561-018-0227-0

Showing 50 of 111 references

Cited By

24

The Impact of Financial Institution Quality and Financial Stability on Trade-Adjusted Carbon Emissions: The Moderating Role of Green Innovation and Environmental Taxes

Magdalena Radulescu, Ayşe Meriç Yazıcı · 2025

Sustainability

Evaluating the influence of technology, energy consumption, and financial progress on material footprint in GCC countries

Talat Ulussever, Ugur Korkut Pata · 2024

Environmental and Sustainability In...

Metrics

24

Citations

111

References

Details

Published: Apr 24, 2023
Vol/Issue: 31(5)
Pages: 3272-3290
License: View

Authors

G

George S. Chen

UNE Business School, Faculty of Science, Agriculture, Business and Law University of New England Armidale Australia

E

Emmanuel Kwaku Manu

UNE Business School, Faculty of Science, Agriculture, Business and Law University of New England Armidale Australia

D

Dennis Asante

College of Medicine & Public Health, Rural and Remote Health Flinders University Renmark Australia

Cite This Article

George S. Chen, Emmanuel Kwaku Manu, Dennis Asante (2023). Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions. Sustainable Development, 31(5), 3272-3290. https://doi.org/10.1002/sd.2584

Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions

You May Also Like