The impact of income, trade, urbanization, and financial development on CO2 emissions in 19 emerging economies.

Abstract

This study attempts to empirically examine the impact of financial development, income, trade openness, and urbanization on carbon dioxide emissions for the panel of emerging economies using the time series data over the period 1990-2013. Results showed a positive monotonic relationship between income and CO2 emissions. All models do not support the EKC hypothesis which assumes an inverted U-shaped relationship between income and environmental degradation. Financial development has a long-run negative impact on carbon emissions, implying that financial development minimizes environmental degradation. This means that financial development can be used as an implement to keep the degradation environmental clean by introducing financial reforms. The urbanization decreases the CO2 emissions; therefore, it is important for the policymakers and urban planners in these countries to slow the rapid increase in urbanization.