The role of financial development indicators in sustainable development-environmental degradation nexus

Li, Xiaolong; Yu, Zhiyuan; Salman, Asma; Ali, Qaisar; Hafeez, Muhammad; Aslam, Muhammad Shoaib

The role of financial development indicators in sustainable development-environmental degradation nexus

2021

Sustainable development is significantly contributing the environmental degradation due to improvements in financial sector in One Belt and Road Initiative (BRI) region. Thus, the present research work constructs the sustainable development index for BRI. Afterwards, it unfolds the nexus of sustainable development-environmental degradation and also evaluates the role of financial development indicators in BRI economies. By utilizing the robust mean group, the present study quantifies the long-run marginal impacts of sustainable development, financial development indicators, energy consumption, and urban sprawl on environmental degradation, respectively. The marginal impacts infer an inverted U-shaped sustainable development environmental Kuznets curve in BRI region. The sustainable development, energy consumption, and urban sprawl are enriching the environmental degradation, whereas the financial development indicators have an adverse impact on environmental degradation by induction of interaction of sustainable development-financial development. Therefore, the improvements in financial development indicators will help to achieve the sustainable development. Note: + and _ depict the significant positive and negative impact respectively while illustrates ⇒ causal direction.

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