The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries
The global debate among policy makers and environmentalists concerns how environmental degradation can be minimized without impeding economic growth. Because of intensification of geopolitical uncertainty, achieving this balance has become difficult. To contribute to breaking this “deadlock”, our re...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-11-01
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| Series: | Borsa Istanbul Review |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845023000996 |
| _version_ | 1797399103020204032 |
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| author | Lan Khanh Chu Huong Hoang Diep Truong Dung Phuong Hoang |
| author_facet | Lan Khanh Chu Huong Hoang Diep Truong Dung Phuong Hoang |
| author_sort | Lan Khanh Chu |
| collection | DOAJ |
| description | The global debate among policy makers and environmentalists concerns how environmental degradation can be minimized without impeding economic growth. Because of intensification of geopolitical uncertainty, achieving this balance has become difficult. To contribute to breaking this “deadlock”, our research explores the interlinkage among financial development, geopolitical risk, and the environmental footprint in 40 high- and middle-income countries from 2000 to 2018. The estimated results obtained from a novel quantile regression show the heterogeneous environmental impacts of bank credit, the stock market, and geopolitical uncertainty across the quantile distribution of the environmental footprint and two country groups. Although the credit market tends to reduce the environmental footprint in high-income countries with moderate environmental quality, it exacerbates environmental degradation in middle-income countries. Similarly, stock market development improves the environment in high-income countries but harms it in middle-income countries that have extremely good and poor environmental quality. Geopolitical risk is found to escalate environmental degradation in both high- and middle-income countries. In addition, the empirical outcomes confirm the moderating role of geopolitical risk on the linkage between financial development and environmental footprint. In high-income countries, escalating geopolitical risk has two contrasting effects on the environmental impact of financial development. Whereas high geopolitical uncertainty reduces the harmful impact of bank credit on the environment, it magnifies the harmful impact of the stock market. In middle-income countries, high geopolitical risk reduces the harmful impact of both bank credit and the stock market on environmental sustainability. These complex relationships offer new implications for policy makers in the transition to a sustainable environment. |
| first_indexed | 2024-03-09T01:34:36Z |
| format | Article |
| id | doaj.art-d4ef0054307442558ec2ba52b3751259 |
| institution | Directory Open Access Journal |
| issn | 2214-8450 |
| language | English |
| last_indexed | 2024-03-09T01:34:36Z |
| publishDate | 2023-11-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Borsa Istanbul Review |
| spelling | doaj.art-d4ef0054307442558ec2ba52b37512592023-12-09T06:06:22ZengElsevierBorsa Istanbul Review2214-84502023-11-0123613331355The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countriesLan Khanh Chu0Huong Hoang Diep Truong1Dung Phuong Hoang2Banking Academy of Vietnam, Viet NamBanking Academy of Vietnam, Viet Nam; National Economics University, Viet Nam; Corresponding author.National Economics University, Viet NamThe global debate among policy makers and environmentalists concerns how environmental degradation can be minimized without impeding economic growth. Because of intensification of geopolitical uncertainty, achieving this balance has become difficult. To contribute to breaking this “deadlock”, our research explores the interlinkage among financial development, geopolitical risk, and the environmental footprint in 40 high- and middle-income countries from 2000 to 2018. The estimated results obtained from a novel quantile regression show the heterogeneous environmental impacts of bank credit, the stock market, and geopolitical uncertainty across the quantile distribution of the environmental footprint and two country groups. Although the credit market tends to reduce the environmental footprint in high-income countries with moderate environmental quality, it exacerbates environmental degradation in middle-income countries. Similarly, stock market development improves the environment in high-income countries but harms it in middle-income countries that have extremely good and poor environmental quality. Geopolitical risk is found to escalate environmental degradation in both high- and middle-income countries. In addition, the empirical outcomes confirm the moderating role of geopolitical risk on the linkage between financial development and environmental footprint. In high-income countries, escalating geopolitical risk has two contrasting effects on the environmental impact of financial development. Whereas high geopolitical uncertainty reduces the harmful impact of bank credit on the environment, it magnifies the harmful impact of the stock market. In middle-income countries, high geopolitical risk reduces the harmful impact of both bank credit and the stock market on environmental sustainability. These complex relationships offer new implications for policy makers in the transition to a sustainable environment.http://www.sciencedirect.com/science/article/pii/S2214845023000996Environmental footprintFinancial developmentGeopolitical riskHigh-income countriesMiddle-income countries |
| spellingShingle | Lan Khanh Chu Huong Hoang Diep Truong Dung Phuong Hoang The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries Borsa Istanbul Review Environmental footprint Financial development Geopolitical risk High-income countries Middle-income countries |
| title | The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries |
| title_full | The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries |
| title_fullStr | The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries |
| title_full_unstemmed | The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries |
| title_short | The varying impact of financial development on the environmental footprint due to geopolitical risk: The difference between high- and middle-income countries |
| title_sort | varying impact of financial development on the environmental footprint due to geopolitical risk the difference between high and middle income countries |
| topic | Environmental footprint Financial development Geopolitical risk High-income countries Middle-income countries |
| url | http://www.sciencedirect.com/science/article/pii/S2214845023000996 |
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