FINANCIAL DEVELOPMENT, ENERGY CONSUMPTION AND ENVIRONMENTAL QUALITY IN DEVELOPING COUNTRIES

Abstract

This study aims to analyze the impact of financial development on greenhouse gas emissions in the case of developing countries, considering the spillover effects due to energy consumption. For this purpose, static and dynamic panel threshold regression models were used. The evidence obtained from the 2003-2019 period data shows that financial development has a significant threshold effect on emissions. How this effect works depends on the distinction between financial institutions and financial markets. In contrast to financial market development, in countries where the financial institution development index is above 0.356, the forces that increase emissions have been observed to weaken.