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The impact of financial development on environmental quality: evidence from Malaysia

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Abstract

This paper examined the impacts of financial development on environmental quality in Malaysia, using the sum of financial access, depth, and efficiency as auxiliary variables for financial development from 1987 to 2020. The autoregressive distributed lag method was used to examine whether a level relationship (long run) existed among the variables. The paper found a long-run relationship among the variables. Financial development, population growth, economic growth, and energy usage positively significantly contribute to environmental degradation in both the short and long run, while squared economic growth significantly enhanced environmental quality in both the short and long run. Hence, environmental carbon Kuznets curve (ECKC) hold in Malaysia.

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Data availability

The data used in this research is available at https://data.worldbank.org/indicator.

Notes

  1. https://data.worldbank.org/indicator.

Abbreviations

ECKC:

environmental carbon Kuznets curve

CO2 :

carbon dioxide emission

GDP:

gross domestic product

GDP2 :

squared gross domestic product

POP:

population

ENG:

energy use

GMM:

generalized method of moment

ADL:

autoregressive distributive lags model

GEDI:

generate environmental degradation index

PCA:

principal component analysis

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Code availability

All the results reported in this research are carried out in R-studio environment

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Authors and Affiliations

  1. School of Economics and Management, Wuhan University, Wuhan, 430072, Hubei, China

    Yunling Ye & Chuanqing Wu

  2. Department of Mathematics and Statistics, Hazara University, Mansehra, Pakistan

    Yousaf Ali Khan, Ejaz Ali Shah & Syed Zaheer Abbas

  3. School of Statistics, Jiangxi University of Finance and Economics, Nanchang, China

    Yousaf Ali Khan

  4. School of Mathematics and Statistics, Beijing Institute of Technology, Beijing, China

    Syed Zaheer Abbas

Authors
  1. Yunling Ye
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  2. Yousaf Ali Khan
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  3. Chuanqing Wu
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  4. Ejaz Ali Shah
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  5. Syed Zaheer Abbas
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Correspondence to Chuanqing Wu or Syed Zaheer Abbas.

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Ye, Y., Khan, Y.A., Wu, C. et al. The impact of financial development on environmental quality: evidence from Malaysia. Air Qual Atmos Health 14, 1233–1246 (2021). https://doi.org/10.1007/s11869-021-01013-x

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Keywords

Jel classification

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