The Impact of Financial Development on Carbon Emissions: Evidence from Quantile Panel Regression for EU Countries and Türkiye
DOI:
https://doi.org/10.22452/IJIE.vol18no4.4Keywords:
Climate change, Financial development, Carbon emission, Environmental Kuznets curve, Panel quantile distributionAbstract
This study examines the dynamic impact of financial development on
carbon emissions in European Union nations and Türkiye from 2010 to 2023. The
research utilises panel quantile regression methods to tackle the intrinsic variability
in the link between financial development and environmental consequences, offering
a more thorough insight than conventional mean-based econometric techniques. The
analytical approach facilitates the examination of unique repercussions at various levels
of carbon emissions, revealing insights into the distinct effects of financial mechanisms
in different environmental circumstances. The findings offer empirical evidence for an
N-shaped Environmental Kuznets Curve, indicating a non-linear correlation between
economic development and environmental quality. This research significantly enhances
the literature by including financial development into the discourse on environmental
policy. It underscores the necessity of tailoring financial policies to achieve sustainable
development goals. The findings offer critical policy implications, emphasising the role of
targeted financial interventions in mitigating environmental harm and aligning economic
activities with sustainability objectives. The findings have crucial policy implications,
stressing the need for targeted financial measures in minimising environmental impact.
To boost empirical credibility, robustness checks utilising Driscoll-Kraay standard errors
were undertaken, verifying the consistency of the results across estimation methodologies.
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