We examine the relationship between financial sector development and the shadow economy in Indonesia from 1980 to 2020. We estimate the size of Indonesia's shadow economy using the "Modified Cash to Deposits Ratio" approach. We then construct a long-term model using the size of Indonesia's shadow economy as the dependent variable. We set financial sector development as the main independent variable in our model. We use per capita real gross domestic product, the misery index, and foreign direct investment as control variables in our model. We find that financial sector development and the size of Indonesia's shadow economy have a nonlinear relationship that shows an inverted U-shape curve. The size of the shadow economy expands at the early stages of financial sector development to a turning point and decreases when financial sector development increases further. We also find that foreign direct investment curtails Indonesia's shadow economy. Additionally, increases in income expand Indonesia's shadow economy while misery index shows ambiguous results. We suggest the Indonesian authorities widen access for micro, small, and medium firms to the credit markets and enhance existing programs to reduce poverty and narrow the income gap in the country. These efforts help to narrow the size of Indonesia's shadow economy.
The paper examines the impacts of financial development on sectoral carbon emissions (CO2) for environmental quality in Malaysia. Since the financial sector is considered as one of the sectors that will contribute to Malaysian economy to become a developed country by 2020, we utilize a cointegration method to investigate how financial development affects sectoral CO2 emissions. The long-run results reveal that financial development increases CO2 emissions from the transportation and oil and gas sector and reduces CO2 emissions from manufacturing and construction sectors. However, the elasticity of financial development is not significant in explaining CO2 emissions from the agricultural sector. The results for short-run elasticities were also consistent with the long-run results. We conclude that generally, financial development increases CO2 emissions and reduces environmental quality in Malaysia.
The disastrous consequences of climate change for human life and environmental sustainability have drawn worldwide attention. Increased global warming is attributed to anthropogenic greenhouse gas (GHG) emissions, biodiversity loss, and deforestation due to industrial output and huge consumption of fossil fuels. Financial inclusion can be acted as an adaptation or a mitigation measure for environmental degradation. This study analyzed the impact of financial inclusion on environmental degradation in OIC countries for the period 2004-2018. A novel approach, "Dynamic Common Correlated Effects (DCCE)" is used to tackle the problem of heterogeneity and cross-sectional dependence (CSD). Various GHG emissions along with deforestation and ecological footprint are used as indicators of environmental degradation. Long-run estimation confirms that financial inclusion is positively and significantly linked with CO2 emission, CH4 emission, and deforestation while negatively correlated with ecological footprint and N2O emission in overall and higher-income OIC economies. An inverted U-shaped environmental Kuznets curve (EKC) is validated when ecological footprint, CO2, and CH4 are used in all panels of OIC countries. An inverted U-shaped EKC is also observed for deforestation in lower-income and overall OIC countries. In the case of N2O emission, however, a U-shaped EKC appears in lower-income and overall OIC countries. It is suggested that the governments of OIC countries should continue to have easy access to financial services and maintain sustainable use of forests and biocapacity management to address environmental challenges.
This study investigates the impact of the aggregate and individual dimensions of environmental performance (EP) on financial performance (FP), based on a dataset covering the travel and tourism industry (airlines, casinos, hotels, and restaurants) across different economic regions over the period 2003-2014. The results reveal that EP positively affects the FP in the hotel industry when aggregate EP is used. When individual dimensions of EP are considered, resource reduction is found to positively (negatively) affect the performance in the hotel (airline) industry, while product innovation positively affects the performance in the restaurant industry. Hence, the trade-off effect seems to be dominant in the airline industry, and the 'heterogeneous resources and reputation-building' hypothesis is evident in both the hotel and restaurant industries. In addition, in general, the findings support the positive moderating effect of slack resources on the relationship between the individual dimensions of EP and FP in the travel and tourism industry, and, hence, are supportive of the slack resources hypothesis. These effects, however, vary depending on the travel and tourism industry under investigation.
The well-established emissions-growth debate relies on the symmetric nexus between CO2 emissions and economic growth, thereby ignoring a fundamental component of macro economy in the form of asymmetric relation. This paper considers how CO2 emissions respond asymmetrically to changes in economic growth. While utilizing both linear and nonlinear time series approaches for an environmentally exposed country, Pakistan over the period 1971-2018, we find convincing evidence that CO2 emissions rise more rapidly during negative shocks to economic growth than increase during economic expansions. Thus, contrary to what has previously been reported, the effect is strong as holds both at short run and long run. This is partly due to the increase in informal sector as GDP declines. Our estimated results show that accounting for the shadow economy results a higher magnitude of CO2 emissions due to decrease in economic growth, thus question the traditional symmetric decoupling of economic growth and CO2 emissions. The estimated results are robust to alternative estimators such as fully modified least squares (FMOLS) and dynamic OLS (DOLS). Thus, the findings of this study call for a re-thinking on climate policy design that rarely pays attention to the aforementioned outcomes due to fall in economic growth.
The present study investigates the impact of climate change on biodiversity loss using global data consisting of 115 countries. In this study, we measure biodiversity loss using data on the total number of threatened species of amphibians, birds, fishes, mammals, mollusks, plants, and reptiles. The data were compiled from the Red List published by the International Union for Conservation of Nature (IUCN). For climate change variables, we have included temperature, precipitation, and the number of natural disaster occurrences. As for the control variable, we have considered governance indicator and the level of economic development. By employing ordinary least square with robust standard error and robust regression (M-estimation), our results suggest that all three climate change variables - temperature, precipitation, and the number of natural disasters occurrences - increase biodiversity loss. Higher economic development also impacted biodiversity loss positively. On the other hand, good governance such as the control of corruption, regulatory quality, and rule of law reduces biodiversity loss. Thus, practicing good governance, promoting conservation of the environment, and the control of greenhouse gasses would able to mitigate biodiversity loss.
South and Southeast Asia is by far the most populous region in Asia, with the greatest number of threatened species. Changes in habitat are a major contributor to biodiversity loss and are more common as a result of land-use changes. As a result, the goal of this study is to use negative binomial regression models to investigate habitat change as one of the important drivers of biodiversity loss in South and Southeast Asian countries from 2013 to 2018. According to the negative binomial estimates, the findings for the habitat change measures are quantitatively similar for the impacts of agricultural land and arable land on biodiversity threats. Agricultural and arable land both have a positive impact on biodiversity loss. We found that, contrary to our expectations, the forest area appears to have an unexpected direct influence on the number of threatened species. A higher number of threatened species is associated with rising per capita income, human population and a low level of corruption control. Finally, the empirical findings are consistent across taxonomic groups, habitat change measures and Poisson-based specifications. Some policy implications that could mitigate biodiversity loss include educating and promoting good governance among the population and increase the conservation effort to sustain green area and national forest parks in each country.
Developing countries have witnessed economic growth as their GDP keeps increasing steadily over the years. The growth led to higher energy consumption which eventually leads to increase in air pollutions that pose a danger to human health. People's healthcare demand, in turn, increase due to the changes in the socioeconomic life and improvement in the health technology. This study is an attempt to investigate the impact of environmental quality on per capital health expenditure in 125 developing countries within a panel cointegration framework from 1995 to 2012.
Although increased attempts to preserve biodiversity ecosystems have been widely publicized, bibliometric research of biodiversity loss remains limited. Using VOSviewer, we hope to provide a bibliometric assessment of global research trends on biodiversity loss from 1990 to 2021. Document type, language, publication trend, countries, institutions, Author Keywords, and Keywords Plus were all examined. This study recorded a total of 6599 publications from the Web of Science Core Collection database. According to the findings, biodiversity loss research is expected to rise dramatically in the near future. However, the role of social sciences and economics in biodiversity loss studies has received little attention. The USA made the most significant contribution in this field. Biological Conservation was the most productive journal, and Proceedings of the National Academy of Sciences of the United States of America was the most influential journal in biodiversity loss literature. Eisenhauer, N was the most prolific author, and Collen, B was the most referenced. Biodiversity, biodiversity loss mechanisms, biodiversity loss drivers, conservation, and climate change have been the topic of previous research. Possible future research hotspots may include species diversity and many elements of biodiversity. Lastly, the outcomes of this study suggest that existing socio-economic concerns can be integrated into decision-making processes to improve biodiversity conservation.